The tax treatment of corporate profit means that corporations
A. cannot profitably issue common stock.
B. choose investment opportunities more efficiently than do other types of firms.
C. limit the things in which corporations can invest.
D. can generally avoid paying federal taxes but not state taxes.
Answer: C
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Why does economic theory predict that a perfectly competitive firm will produce at the point where price equals marginal cost?
a. This point provides an efficient allocation of society's resources. b. This point results in zero economic profit. c. This point maximizes profit for the firm. d. This point will minimize ATC for the firm.
The self-correcting mechanism would be expected to be very rapid in an economy with
a. a large multiplier. b. flexible prices. c. rigid wages. d. high labor productivity.