The Law of Eminent Domain Allows a Local Government to Take

question 17

Multiple Choice

The law of eminent domain allows a local government to take a person's property for public use,such as building a freeway that has been designed to cross land owned by this landowner.The landowner,by law,is entitled to be paid the fair market value of her land.However,in a recent action,a local government took a landowner's property under eminent domain and paid that landowner less than fair market value.Under utilitarianism,this government's action:

• A) Definitely was suboptimal
• B) Definitely was optimal because the government saved money for the benefit of society
• C) Definitely was optimal because any act that shifts resources away from a private individual to broader society satisfies the precepts of utilitarianism
• D) May have been optimal or suboptimal, but further inquiry into relevant facts is needed

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Definitions:

Earnings in Dividends

This term is not standard; likely refers to the portion of a company's earnings distributed to shareholders in the form of dividends.

Residual Dividend Policy

A strategy whereby companies pay dividends from the residual or leftover equity only after all project capital needs are met.

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders in dividends, expressed as a percentage of the company's total net income.

Capital Budgeting

The process of evaluating and selecting long-term investments that are consistent with the firm's goal of wealth maximization.