Explain why being a residual claimant can increase the risk from owning stocks.
What will be an ideal response?
The stockholders, being residual claimants, get what is left after everyone else has been paid. While this can be substantial during good years, it also means that during bad years the stockholders may get nothing, and if the corporation does poorly for a number of years, the stockholders' investment can be lost.
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The European Union (EU) is an example of a
A) customs union. B) free trade area. C) reciprocal trade agreement. D) None of the above.
In the 18th century, Southern tobacco planters found that the use of ____________ was economical once the plantation reached a certain size
a. horses b. a plantation manager c. indentured servants d. an iron plow
A country that has a trade surplus:
A. imports more than it exports. B. sells more goods abroad than it buys from abroad. C. has a negative trade balance. D. buys more goods at home that it buys abroad.
Under monopsony, marginal factor cost
A. is less than the wage rate, although it increases as more workers are hired. B. is greater than the going wage rate. C. is downward sloping. D. equals the wage rate.