Positive externalities tend to create free-rider problems because positive externalities
A) appeal more to extroverts than to people who are reflective.
B) are spill over benefits to people who don't pay for them.
C) are concentrated in the hands of people living on unearned income.
D) arise primarily from government programs.
B
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If a corporation retains all its profits and distributes none of the profit to owners, how can owners benefit?
A) If the retained earnings are expected to create future profits, the market price of the firm's stock will increase and create a capital gain for stockholders if the stock is sold. B) Shares of stock can be converted into bonds so stockholders will be able to earn coupon payments. C) Owners will benefit by changing the board of directors. D) Owners will only benefit if some profits are paid out in the form of dividends.
The unfunded nature of the Social Security system has no effect on investment
a. True b. False