Why do firms pay dividends? It would appear that they are subject to double taxation, giving more incentive to eliminate them.
What will be an ideal response?
Dividends may serve as a signal of a firm's financial strength. They may also be used to cater
to a particular clientele.
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Pam graduates from law school and gets a position in a law firm. At the same time the price of hamburger falls while other food prices have stayed the same. She notices that she buys less hamburger than she did before
Is she violating the law of demand? A) Yes, since she is buying less hamburger at a lower price. B) Yes, since she is buying less hamburger in a relatively short period of time and we wouldn't expect her tastes to have changed. C) No, since the law of demand refers to relative price changes and the price of hamburger falling is an absolute price change. D) No, since other things are not held constant, such as her income.
Autonomous determinants of consumption expenditures are dependent on the level of current disposable income
a. True b. False Indicate whether the statement is true or false