Another name for stockholder wealth maximization is
A) profit maximization.
B) maximization of earnings per share.
C) maximization of the value of the common stock.
D) maximization of cash flows.
C
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The market for chewing gum is competitive with a current price of 50 cents per pack and a quantity of 100,000 packs per day. Which of the following events would lead to a new equilibrium price of 75 cents and a new equilibrium quantity of 125,000?
a. an increase in the price of other kinds of candy b. an increase in the price of the ingredients used to make chewing gum c. an agreement by workers in the chewing gum industry to work for lower wages d. a decrease in the number of young people in the population e. a decrease in income
Suppose checking deposits increase by $6,000 after all rounds of the money-creation process when the Fed buys $1,200 worth of U.S. government securities. This implies that the maximum value of the required reserve ratio is: a. 5
b. 0.75. c. 0.2. d. 1.2. e. 1.0.
Microeconomics primarily models: a. the overall economy
b. the behavior of firms but not households. c. the behavior of households but not firms. d. the behavior of both firms and households and how they interact in the marketplace.
Suppose that you purchase a $5,000 bond that pays 7 percent interest annually and matures in five years. If you expect that the inflation rate during the next five years will be 2 percent annually, what real rate of return do you expect to earn?
a. 2 percent b. 5 percent c. 7 percent d. 9 percent