A price increase will always increase a firm’s revenue.
Answer the following statement true (T) or false (F)
False
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XYZ Gadget Company is currently considering which investment projects it should undertake. The following list of projects along with the estimated rate of return of each project is presented to the executive management team:Project A (9%)Project B (7.5%)Project C (6%)Project D (11%)Project E (5.5%)The current interest rate in the loanable funds market is 7%. However, the government is considering an increase in government borrowing to implement fiscal policy. How high would interest rates need to go to induce the company to drop all but one of its planned investment projects?
A. Above 9% B. Above 7% C. Above 7.5% D. Above 11%
Import substitution policies make use of
A) tariffs that discourage goods from entering a country. B) quotas applied to goods that are shipped abroad. C) production subsidies granted to industries with comparative advantage. D) tax breaks granted to industries with comparative advantage. E) production facilities provided by industrialized countries.
Suppose two types of consumers buy suits. Consumers of type A will pay $100 for a coat and $50 for pants. Consumers of type B will pay $75 for a coat and $75 for pants. The firm selling suits faces no competition and has a marginal cost of zero. If the firm sells coats and pants for $25 each, but offers a bundle containing both a coat and pants for $150, how many bundles will the firm sell?
A. 1 B. 0 C. 2 D. Insufficient information
The objective of rent controls is to
A. encourage the construction of new rental units. B. ensure an adequate supply of rental housing for the poor. C. keep rents below levels that would be observed in a freely competitive market. D. raise revenue for the local government.