Unless Substantial Amounts of Capital Are Needed,if a Firm Obtains

question 59

Multiple Choice

Unless substantial amounts of capital are needed,if a firm obtains all of its common equity from retained earnings,what will happen to its marginal cost of capital curve?

• A)It will stay flat.
• B)It will rise.
• C)It will fall.
• D)It will be U-shaped.

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Definitions:

Payroll Tax

A levy placed on either employees or employers, typically determined as a fraction of the wages employers distribute to their workers.

Elasticity of Labor Supply

The responsiveness of workers to change their supply of labor (hours worked) in reaction to changes in wage rates.

Payroll Tax

Tariffs levied on employers and employees alike, generally calculated by a fraction of the workers' salaries.

Regressive

Describes a tax or policy that disproportionately affects lower-income individuals, typically by taking a larger percentage of their income.