Which of the Following Companies Is Most Committed to the Shareholder

question 40

Multiple Choice

Which of the following companies is most committed to the shareholder value approach?

• A) Company A, when it decides to expand from a microchip manufacturer to an on-line internet company.
• B) Company B, a bank that acts on opportunities to buy other distressed banks cheaply in order to grow its deposit base.
• C) Company C, an auto company that focuses on cost cutbacks and pension rollback to improve the bottom line.
• D) Company D, a software company that introduces to its mission statement shareholder values initiatives such as salary freezes.
• E) Company E, a shipping company that makes short term investments of free cash flows in oil and gas companies.

Determine the distribution of tax burden between firms and workers.

Understand the concept of tax incidence and how taxes can be shifted.

Examine the elasticity of labor supply and demand and its implications for tax burden.

Analyze the longer-term effects of various taxes, including corporate profits tax.

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Definitions:

Profits

The financial gain realized when the revenue from selling goods or services exceeds the costs of production.

Monopolized

Refers to a market structure where a single firm or entity controls a significant portion of the market share, reducing competition.

Consumer Surplus

Consumer Surplus is the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually do pay.

Net Social Gain

The overall benefit to society, calculated by subtracting total social costs from total social benefits.