What Do We Call Power That Is Viewed as Legitimate

question 28

Multiple Choice

What do we call power that is viewed as legitimate and justified, and that is institutionalized in politics, religion, and law?

• A) force
• B) control
• C) influence
• D) authority

Recognize the effects of stock splits and dividends on company's equity and per share values.

Differentiate between the rights and privileges of preferred stockholders versus common stockholders.

Comprehend the basic accounting for issuance and repurchase of company's own shares.

Understand the declaration, payment, and impact of dividends on a company’s financial position.

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Definitions:

Marginal Cost

The amount spent on manufacturing one more unit of a product.

Monopoly

A market structure characterized by a single seller, selling a unique product in the market. In a monopoly, the seller faces no competition, as he is the sole seller of goods with no close substitute.

Economies of Scale

Companies experience a decrease in the average cost of production as they scale up their operations, resulting in cost efficiencies.

Natural Monopoly

A market condition where due to high fixed costs or unique resources, one firm can supply the entire market more efficiently than if there were multiple firms.