When a Firm Reinvests Some of Its Net Income Rather

question 110

Multiple Choice

When a firm reinvests some of its net income rather than distributing it all to owners, what is the result?

• A) an increase in covenants
• B) an increase in net liabilities
• C) an increase in retained earnings
• D) an increase in dividends

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Definitions:

Bundle

A combination of goods or services that are considered together as a single aggregate.

Consumer's Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing the extra utility gained.

Demand Function

A mathematical equation that describes the relationship between the quantity of a good that consumers are willing and able to purchase and its price.

Supply Function

A mathematical representation showing the amount of goods that producers are willing and able to sell at different prices, graphically depicted as a curve.