Exhibit 2-8

question 87

Multiple Choice

Exhibit 2-8
-Current production at which labeled point in Exhibit 2-7 would lead to the largest outward shift in the production possibilities frontier in a later year?

• A)point a because this point represents a greater consumption level than point b
• B)point b because this point represents greater total production than the other two points
• C)point c because this point represents a greater consumption level than the other two points
• D)point b because this point represents greater production of capital than point c
• E)point c because this point represents greater production of capital than the other two points

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Definitions:

Cumulative Preferred Stock

A type of preferred stock where dividends accrue and must be paid out before dividends can be distributed to common stockholders.

Par Common Stock

The nominal or face value assigned to a share of common stock, which has relevance in corporate accounting.

Par Value

A nominal value assigned to a stock or bond, representing its face value rather than its market value.

Stock Split

This action increases the number of shares of a corporation by issuing more shares to current shareholders, which typically results in a decrease in the per-share price, making the stock more accessible to a wider range of investors.