The long-run supply curve in a competitive market is upward sloping. Indicate whether the statement is true or false ANSWER False. The shape of the long-run supply curve will depend on how similar the firms are and on the relationship between factor prices and total industry output.
Date: September 9th, 2020
Empirical studies conclude that advertising A) raises prices in all markets. B) can reduce the prices of many goods. C) reduces the prices on all goods. D) has no impact on prices. ANSWER B
Date: September 9th, 2020
What additional complexities arise when multinational corporations consider capital projects on a global basis? What will be an ideal response? ANSWER Considerations must be given to the impact on projected cash flows from differences in tax laws and tax rates, exchange rate controls and changes, limitations on repatriation of profits, tariffs and quotas on […]
Date: September 9th, 2020
What are the major risks facing multinational corporations? What will be an ideal response? ANSWER Sudden and unexpected changes in exchange rates; capital controls; expropriation of property; ownership and human resource restrictions; lack of protection for intellectual property; non-enforcement of contracts and business laws; civil unrest and wars; corruption; discriminatory policies against foreign personnel […]
Date: September 9th, 2020
A firm’s most recent annual dividend was $2 per share; its shares sell for $40 in the stock market, and the company expects its dividend to grow at a constant rate of 5% in the foreseeable future. Using the dividend growth (Gordon) model, what would you estimate its equity cost of capital to be? […]
Date: September 9th, 2020
If consumers have limited information about price and search costs exist, then A) the result must be that all firms will charge the same price. B) the monopoly price must result. C) the full-information, competitive price is not an equilibrium. D) the difference in prices between firms will be greater than the search cost. […]
Date: September 9th, 2020
A U.S.-based multinational has two subsidiaries, one in Lithuania where the tax rate is 15%, and one in Ireland where the tax rate is 2%. The tax rate in the U.S. is 35%. If the Lithuanian-based subsidiary is transferring a good to the Irish subsidiary and the goal is to avoid taxes, it will A) […]
Date: September 9th, 2020
What are the major sources of risk for the firm? What will be an ideal response? ANSWER Economic uncertainty, competition (actions of competitors), changes in demand, changes in technology, changes in input costs
Date: September 9th, 2020
If the shut-down rule, p < AVC, is the same in the short run and the long run, explain why the shut-down prices may be different. What will be an ideal response? ANSWER In the long run all costs are variable. In the long run, the average variable cost is usually higher than in […]
Date: September 9th, 2020
What are the major ways that the risks of exchange rate changes can be hedged against? What will be an ideal response? ANSWER Offsetting transactions in the same currency; buying or selling currency in the forward or futures markets; call or put options; and currency swaps.
Date: September 9th, 2020
