MCI announced a price discount plan for small firms. Their stock immediately fell in price. This shows that:
A. AT&T sold out its stock of MCI just after the announcement.
B. stockholders are sometimes not rational.
C. MCI is probably competing in a Bertrand oligopolistic industry.
D. there is increased demand for MCI's stock.
Answer: C
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Distinguish between demand and quantity demanded. Do the same for supply and quantity supplied.
What will be an ideal response?
What actions could the Federal Reserve take to achieve consistent growth in real GDP at 4 percent per year?
A) The Fed could follow contractionary monetary policy that would reduce the federal funds rate to zero so investment will rise consistently. B) The Fed could maintain a growth rate of the money supply of 4 percent, regardless of whether inflation was rising or falling in the economy. C) The Fed has no direct control over real GDP in the long run, so there are no actions it could take to achieve that goal. D) The Fed could increase the growth rate of the money supply by 1% each year until the inflation rate was exactly equal to 4 percent.
Refer to the graph shown. Which statement best characterizes the difference between the effect of a price ceiling in the short run and the long run?
A. A price ceiling of P0 will create a shortage of (Q3 ? Q0) in the short run and the long run. B. A price ceiling of P0 will create a shortage of (Q4 ? Q0) in the short run and the long run. C. A price ceiling of P2 will create a shortage of (Q3 ? Q1) in the short run, but a greater shortage of (Q3 ? Q0) in the long run. D. A price ceiling of P2 will create a shortage of (Q3 ? Q0) in the short run and a smaller shortage of (Q3 ? Q1) in the long run.
If you generate a new idea that has not been implemented yet by anyone else, and the idea offers a more profitable use of some resource, it is likely an example of:
A. a goal other than profit. B. intervention. C. innovation. D. market failure.