The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Bennett Corp did well this year. Its industry is booming and everyone expects it to continue to do so. Bennett paid a dividend that was 15% higher than last year's. Surprisingly the price of Bennett's stock dropped immediately after the dividend was announced. What's going on?

A) Stockholders are cashing in on the good times and taking their profits while they can.
B) Investors expected a bigger dividend increase, which was factored into the stock's price. They were disappointed by a mere 15%, and adjusted their opinions of the stock downward.
C) Nothing unusual is going on. Stocks move up and down, sometimes randomly. In this case the dividend just happened to coincide with a brief downturn.
D) Investors probably expected a stock split and were disappointed when they didn't get it.

The trains of the Transcontinental Railway Company,when shipping goods,sometimes emit sparks that start fires along the tracks and damage the property of others.If Transcontinental does not pay for the damage it causes,what has occurred?

A) Positive externality.
B) Demand-side market failure.
C) Supply-side market failure.
D) All of these.

The simple rate of return, rate of return on assets and the unadjusted rate of return are synonymous with:

A) the accounting rate of return.
B) the payback method.
C) the internal rate of return.
D) discounted cash flow.

Operating leases

A) are reported on the balance sheet as an intangible asset.
B) are,in essence,the acquisition of an asset using debt.
C) allow companies to take advantage of various tax benefits
D) have a lease term of one year or less.

Under what conditions might government intervention in a market economy improve the economy's performance?