Suppose That the Marginal Benefits of Giving a Gift Are

question 40

Multiple Choice

Suppose that the marginal benefits of giving a gift are greater than the marginal costs of giving a gift. Is the efficient number of gifts being given? If not, what should the gift giver do to move toward the efficient number of gifts being given.

• A)Yes, the efficient number of gifts is being given since the marginal benefit of gift giving is greater than the marginal cost of gift giving.
• B)No, the efficient number of gifts is not being given.The gift giver should increase the number of gifts given to move toward efficiency.
• C)No, the efficient number of gifts is not being given.The gift giver should decrease the number of gifts given to move toward efficiency.
• D)No, the efficient number of gifts is not being given.However, it is not possible to determine whether the gift giver should increase or decrease gift giving to move toward efficiency.

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Definitions:

Common Stock Quote

The current price at which a share of common stock is trading on the stock market.

Dividends

Profits paid out by a corporation to its shareholders as distributions.

Payments In Kind

Transactions where the payment is made in goods, services, or other non-cash forms instead of monetary payment.

Retained Earnings

The portion of net income that a company retains instead of distributing to shareholders as dividends, often used for reinvestment in the business or to pay off debt.