Explain why using a firm's profits to reinvest in the company is really not "free borrowing"?
What will be an ideal response?
The profits that the company is using could have alternative uses. Whatever those are determines the cost of using them to reinvest in the company. Therefore, the funds are really not free to use.
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The monopolist will maximize profits at the output level for which:
A. marginal revenue equals marginal cost. B. price equals marginal cost. C. price equals average total cost. D. marginal revenue equals average total cost.
Explain why it might be necessary in some circumstances for firms to pay workers wages that are higher than the legislated minimum wage even for jobs requiring low skills
What will be an ideal response?
Unemployment can be caused by downswings in the business cycle, people changing jobs, different skills needed by employers, or seasonal fluctuations in demand
a. True b. False Indicate whether the statement is true or false
Suppose the Dow Jones Industrial Average has risen for three days in a row. According to the efficient markets theory of stock prices,
a. it will probably fall again tomorrow b. it will probably rise tomorrow to compensate for recent losses c. it is more likely to rise tomorrow than if it had fallen three days in a row d. it is just as likely to rise again tomorrow as if it had fallen three days in a row e. it will most likely remain unchanged tomorrow