Which of the Following Statements About Economic Profits Is Not

question 124

Multiple Choice

Which of the following statements about economic profits is not correct?

• A)Economic profits act as a signal to producers who make decisions about how to allocate scarce resources.
• B)Economic profits are influenced by the degree of monopoly power.
• C)Economic profits represent a reward for risk taking.
• D)Economic profits are an explicit cost of production.

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Definitions:

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price, indicating the earnings investors are making from dividends.

Cash Dividends

Earnings given by a corporation to its investors, usually in the form of profit sharing.

Market Value

The current price at which an asset or service can be bought or sold, often used in reference to the market price of stocks or other securities.

Discount on Common Stock

A reduction offered on the par or stated value of common stock, typically related to issuance below market value.