The case against advertising includes the fact that
A. it increases competition by decreasing barriers to entry of new firms into an industry.
B. it ensures high quality and efficient production.
C. it provides consumers with valuable information about product availability, quality, and price.
D. firms spend large sums of money to create artificial differences among products.
Answer: D
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The internal rate of return of a project can be found by
A) discounting all cash flows at the cost of capital. B) averaging all cash inflows, and calculating the interest rate, which will make them equal to the average investment. C) calculating the interest rate, which will equate the present value of all cash inflows to the present value of all cash outflows. D) None of the above
The law of increasing relative costs, depicted by the concavity of the production opportunities frontier, is most closely related to the
a. downward slope of the demand curve. b. upward slope of the demand curve. c. downward slope of the supply curve. d. upward slope of the supply curve.
A monopoly arises when there:
a. is a firm desiring to compete in many markets. b. is a firm wanting to maximize profits. c. are barriers to the entry of other firms in the industry. d. is government intervention to establish and enforce a price ceiling.
If P = Q/15 represents market supply for a competitive industry and market demand is given by Qd = 500 - 10P, the equilibrium price is:
A. $12.50. B. $50.00. C. $20.00. D. $31.25.