Profits used by a corporation for investment or unforeseen contingencies are known as retained earnings.
Answer the following statement true (T) or false (F)
True
Corporations may also want to retain some profits for operational needs or unforeseen contingencies.
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In 1980, in order to stimulate agricultural production, Fidel Castro allowed Cuban farmers to sell their goods directly to consumers and keep whatever profit they made. Some farmers were earning $50,000 per year, compared with the average worker income of $2,400. The workers resented this. Castro denounced the farmers as “capitalist gangsters” and closed the free markets. Cuban cash income declined 5 percent and fresh vegetables were in short supply. This illustrates the economic concept of the
A. law of comparative advantage. B. equality-efficiency trade-off. C. cost disease of the service sector. D. unemployment-inflation trade-off. E. All of these responses are correct.
In a market economy, which of the following is an incentive for producers to produce efficiently?
A. The production possibilities curve. B. Profits. C. Government laws and regulations. D. The public's welfare.
To avoid the stock versus flow issue in production, some economists discuss capital usage in terms of rented capital
For example, your firm may not directly own some of the capital inputs to your production operation, and these capital inputs are employed on an hourly or daily basis. Which of the following inputs is a good example of a capital input that acts like a flow? A) Land and buildings that are owned by the firm B) A long-term licensing agreements that allow you to use a patented idea owned by another firm C) A forklift that is rented on an hourly basis D) all of the above
If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost of MC = 1,100 + 2Q, then the firm will produce at a price of
A. $1,400. B. $1,600. C. $1,700. D. $16.