Adam Makes $25,000 Per Year and Bob Makes $45,000 a Year

question 103

Multiple Choice

Adam makes $25,000 per year and Bob makes $45,000 a year, and they both have the same marginal benefit curve. According to the utilitarian view, if a dollar is transferred from Bob to Adam, then

• A) Adam's marginal benefit increases by more than Bob's marginal benefit decreases.
• B) the change in Adam's marginal benefit plus the change in Bob's marginal benefit equals zero.
• C) the change in Adam's marginal benefit plus the change in Bob's marginal benefit is negative.
• D) Adam's marginal benefit decreases by more than Bob's marginal benefit increases.

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Definitions:

Dividends Expense

The sum distributed from a portion of a company's earnings to its shareholders; often associated with preference shares.

Common Stock Dividend Distributable

Stockholders’ equity account that accumulates a stock dividend that has been declared but not yet issued and distributed.

Paid-in Capital

The amount of money that a company has received from shareholders in exchange for shares of stock.

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, as stated by the issuer.