1. Government's frequently set price floors that maintain minimum prices (e.g. minimum wage) and price ceilings that maintain maximum prices (e.g. interest rates, rent for housing, and in the past gasoline). Price floors
a. increase total sales ( sellers' face higher prices)
b. shift the demand down (demand curve shifts to the left)
c. always make every sellers better off
d. all of the above
e. none of the above
2. Your firm follows a strict residual dividend policy. All else equal, which of the following factors would be most likely to lead to an increase in your firm's dividend per share?
a. The company reduces the percentage of equity in its target capital structure.
b. The number of profitable potential projects increases.
c. Congress lowers the tax rate on capital gains.
d. Earnings are unchanged, but the firm issues new shares of common stock.
e. The firm's net income decreases.