A Cake Is to Be Shared by Two People

question 69

Multiple Choice

A cake is to be shared by two people.Both desire the largest piece possible.One of the two will cut the cake.Under which of the following situations will the cutter adopt a Rawlsian social welfare function?

• A) The person cutting the cake chooses the first piece.
• B) The person not cutting the cake chooses the first piece.
• C) The two individuals will bid for the right to cut the cake and choose first.
• D) The two individuals will toss a coin for the right to cut the cake and choose first.

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Definitions:

Shares Outstanding

The sum of all shares of a company currently held by its investors, encompassing both large block holdings by institutional investors and shares that are under restrictions.

Liquidating Dividend

A type of dividend paid by a corporation out of its capital base, as opposed to its earnings, often signaling the company is dissolving.

Dividend Policy

A company's approach to distributing profits back to its shareholders, dictating how much to pay out as dividends and how often.

Alternate Dividend Policy

A strategy used by a company to vary its dividend payments to shareholders based on its earnings or investment opportunities.