If a Firm Is Forced to Take External Costs into Account

question 249

Multiple Choice

If a firm is forced to take external costs into account, it will

• A) reduce production and charge a higher market price.
• B) increase production and charge a lower market price.
• C) reduce prices and hire more workers.
• D) reduce prices and hire fewer workers.

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Definitions:

Weighted-average

A calculation method that assigns different weights to data points, used to determine the average value of various items in a dataset that are not equally significant.

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, measuring its profitability.

Preferred Dividends

Dividends that are paid out to preferred shareholders at a fixed rate before any dividends are paid to common shareholders.

Paid-in Capital

The total amount of money that shareholders have directly invested in a company by purchasing shares during initial offerings or via the secondary market.