If the Price of Capital Increases in an Industry and the Scale

question 12

Multiple Choice

If the price of capital increases in an industry and the scale effect dominates,

• A) wages and employment levels will both increase.
• B) wages and employment levels will both decrease.
• C) wages will increase and employment levels will decrease.
• D) wages will decrease and employment levels will increase.

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Definitions:

Legal Financial Obligation

A requirement to pay money as determined by a legal process or by law.

Declared

Pertains to a dividend or other distribution officially announced by a company's board of directors to be paid to shareholders.

Automatic Dividend Reinvestment

A program that allows investors to reinvest their cash dividends in additional shares or fractional shares of the underlying stock automatically.

Corporate Dividend Policies

Strategies a corporation adopts to decide the size, timing, and payment methods of dividends to shareholders.