Truman Proposed to the Board of Directors of Trumarc, Inc

question 21

True/False

Truman proposed to the board of directors of Trumarc, Inc., that the corporation distribute one percent of its pre-tax yearly income to feed the poor. To Milton Friedman, Truman's proposal would be considered unethical, because it violates the purpose for which the corporation was established.

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Definitions:

Purely Competitive Seller

A firm operating in a market where it must accept the prevailing market price and cannot influence it.

Law of Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other inputs remain at a constant.

Market Value

The current price at which an asset or service can be bought or sold in the open market.

Productivity

Productivity measures the efficiency of production in terms of the amount of goods and services produced per unit of labor, capital, or other inputs.