Suppose your bank account pays a 4% interest rate. You are considering purchasing a share of stock in ABC Corporation for $500 . The stock will pay you a $10 dividend at the end of years 1, 2, and 3 . You expect to be able to sell the stock at the end of year 3 for $550 . Is ABC a good investment? Provide evidence to support your answer
The present value of the investment in ABC Corporation is $516.70, so ABC would be a good investment.
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Labor unions cause unemployment because the union contract wage is set
A) below the market wage, causing a shortage of labor. B) above the market wage, causing a surplus of labor. C) above the market wage, causing a shortage of labor. D) below the market wage, causing a surplus of labor.
If we assume that velocity is constant, and if the money supply increases by 6 percent, we would expect, ceteris paribus, that the price level would
A) increase by 3 percent. B) increase by 6 percent. C) decrease by 3 percent. D) decrease by 6 percent.
In a duopoly, each firm faces:
a. a more elastic demand curve if it raises its price. b. a more elastic demand curve if it lowers its price. c. a perfectly elastic demand curve. d. a perfectly inelastic demand curved.
In the used pick-up truck market:
A. some of the predictions of the lemons model are observed some of the time. B. the lemons model accurately describes the market. C. none of the predictions of the lemons model are observed. D. there is no asymmetric information, and so the lemons model does not apply.