FIGURE 4- 2 -Refer to Figure 4- 2. in Part 2 of the 2

question 56

Multiple Choice

FIGURE 4- 2
-Refer to Figure 4- 2. In part 2 of the figure, the elasticity of demand is

• A) 0.
• B) less than 1.
• C) 1.
• D) greater than 1.
• E) infinity.

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Definitions:

Retained Earnings

The part of net profits not distributed as dividends, instead kept by the company for reinvestment in its main business or for debt repayment.

Earnings Per Share

A company's profit divided by the number of outstanding shares of its common stock, indicating the company's profitability.

Price-Earnings Ratio

A valuation metric for a company, calculated by dividing the market price per share by the earnings per share.

Target Payout Ratio

The proportion of earnings a company plans to distribute to its shareholders as dividends, often expressed as a percentage.