An example of a U.S. export is
A) diamonds mined in Africa sold to buyers in South America.
B) a TV made in China sold to a buyer in Azerbaijan.
C) matchbooks made in Mexico sold to a buyer in New Jersey.
D) a washing machine made in Indiana sold to a buyer in France.
E) pasta made in Italy sold to buyers in Spain.
D
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Some firms provide stock options to managers as an incentive to work hard and increase the value of the firm. A typical option contract gives the manager the right to buy the firm's stock at a set price (known as the exercise price)
If the firm's stock value increases and moves above the exercise price, then the manager's option becomes more valuable. What is the potential problem with this incentive scheme? A) The incentive does not include a performance benchmark, so it cannot be optimal. B) There is a dynamic incentive problem --- the manager may focus too much on the firm's short-run stock value and not on actions that are in the best interest of the firm for the long run. C) The incentive value depends on the firm's stock value, which cannot be influenced by the amount of work or effort exerted by the manager. D) There are no problems with this incentive scheme.
Imperfect information means which of the following?
a. one party to the transaction has more information than the other party b. buyers and sellers have all the information necessary to make an informed decision c. buyers and sellers do not have all the information necessary to make an informed decision d. buyers always have more information than sellers to make an informed decision
The price elasticity of demand measures
A. how responsive consumers are to a change in income. B. changes in demand. C. how responsive consumers are to a change in price. D. how responsive market prices are to a change in demand.
Refer to the above figure. In order to stay open in the short run, this firm must
A. earn a positive profit. B. recover its fixed cost. C. receive a price exactly equal to its average total cost. D. receive a price equal to or greater than the minimum of its average variable cost.