In a Dividend Reinvestment Plan, the Company Issues Additional Shares

question 67

True/False

In a dividend reinvestment plan, the company issues additional shares rather than cash to its shareholders.

Analyze the impact of changes in marginal benefit and marginal cost on optimal decision making.

Apply the principle of marginal analysis to determine the optimal quantity of an activity or good.

Identify the relationship between marginal benefit, marginal cost, and the maximization of total benefits.

Assess the effect of external changes (such as price changes or external costs) on the perceived benefits and costs associated with an activity.

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Definitions:

Explicit Costs

These are the direct, clear expenses related to business operations, such as salaries, utilities, and rent, that are easily quantifiable.

Accounting Profit

The difference between the total revenue and explicit costs of a firm, not accounting for implicit costs.

Economic Profit

The variance between a company's overall incomes and its combined explicit and implicit expenses.

Implicit Costs

The opportunity costs of using resources owned by the firm for its operations instead of renting, selling, or utilizing them in other ways.