An investment project has an expected profit rate of 12 percent. The going rate of interest is 12 percent. Firm X would need to borrow money to carry out this project; firm Y would use its own funds. Which statement is true?
A. Firm X would undertake the project; Firm Y would not.
B. Neither firm would undertake this project.
C. Both firms would undertake this project.
D. Firm Y would undertake the project; Firm X would not.
Answer: D
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Countries with small amounts of capital per worker tend to have ________ levels of real GDP per person and ________ levels of average labor productivity.
A. high; high B. low; average C. low; low D. high; low
"Less demand causes lower prices, and lower prices cause more demand." The above statement shows
A) economic theory can be used to prove just about anything. B) everything depends on everything else. C) prices fluctuate in a free-market situation. D) the speaker has confused himself by saying demand in the first half of the statement when he meant quantity demanded. E) the speaker has confused himself by saying demand in the second half of the statement when he meant quantity demanded.
The consumption bundle that maximizes a consumer's satisfaction given his income is located:
A) at the point of tangency of the consumer's demand curve and indifference curve. B) at any point of intersection of the consumer's demand curve and indifference curves. C) at the point of tangency of the consumer's budget constraint and indifference curve. D) at any point of intersection of the consumer's demand curve and indifference curves.
The bargaining power of suppliers increases if
A) the input supplied is relatively standardized. B) the input in question is not a critical component of production. C) the cost of switching suppliers is relatively low. D) there are only a few competitors to the supplier.