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

question 56

Multiple Choice

The text states: ―The great economic problem is to arrange ourlimited resources to satisfy as many of our limited wants aspossible.‖ 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.(True
• Answer )Correct
• 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:

Retained Earnings

Represents the portion of net income that is not distributed to shareholders but retained by the company for reinvestment in its operations or to pay debt.

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders as dividends, typically expressed as a percentage.

Profit Margin

A financial metric that measures the extent to which a company or a business activity makes money, expressed as a percentage of revenues.

Dividend Payout Ratio

A financial metric that shows what portion of a company's earnings is distributed to shareholders in the form of dividends.