The Text States: ―The Great Economic Problem Is to Arrange

question 97

Multiple Choice

The text states: ―The great economic problem is to arrange our limited resources to satisfy as many of our limited wants as possible.‖ How does a market achieve this goal?

• A) It chooses central planners who are experts at identifying the best uses of resources.
• B) The forces of demand and supply use prices as a signaling device that direct resources to their highest value uses.
• C) It ensures that prices provide an even signal by making sure prices across all markets are equal.
• D) It offers resource-based futures contracts.

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Definitions:

Net Income

The total earnings or profit of a business after deducting expenses, taxes, and costs.

Total Dividends

The sum of all dividend payments made by a company to its shareholders over a specific period.

Residual Dividend Policy

A financial policy regarding dividend payments where dividends are only issued after all project and operational expenses have been met and all planned investments are funded.

Optimal Capital Budget

The set of projects that maximizes the value of the firm.