As Per the Rev

question 18

Multiple Choice

As per the Rev.Rul.59-60 (Sec.4) ,which of the following factors should be considered in valuations?

• A) the price earnings ratio of the company
• B) the earning capacity of the company
• C) the fair market value of the stock of the business
• D) the book value of stocks of similar companies

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Definitions:

No Shirking Constraint

A concept in labor economics that suggests higher wages motivate employees to work harder, reducing shirking on the job.

Efficiency Wage Rate

A wage rate set above the market-clearing level by employers to boost worker productivity, discourage shirking, and reduce turnover.

Wage Rigidity

Wage rigidity refers to the phenomenon where wages do not adjust quickly or easily to changes in labor market conditions, often due to contracts, norms, or regulations.

No Shirking Constraint

An economic principle suggesting that wages must be set at a level that discourages employees from shirking their duties.