When Private Ownership of a Resource Is Clearly Defined and Enforced

question 26

Multiple Choice

When private ownership of a resource is clearly defined and enforced, the private owner

• A) has little incentive to consider the wishes of others when deciding how to employ the resource.
• B) has little incentive to use the resource wisely.
• C) has a strong incentive to consume the resource during the period rather than conserving it for the future.
• D) has a strong incentive to use the resource wisely.

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Definitions:

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profitability that excludes interest and income tax expenses.

Net Income

The total earnings of a company after deducting all expenses from its total revenue, often referred to as the bottom line.

Earnings Per Share

Earnings Per Share (EPS) is a financial ratio that indicates the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.

Dividend Paid

Cash payment distributed to shareholders out of a company’s earnings, reflecting a return on the investment made in the company's equity.