When there are economies of scope between products, selling off an unprofitable subsidiary could lead to:
A. a major reduction in costs.
B. a major reduction in sales.
C. only a minor reduction in costs.
D. only a minor reduction in sales.
Answer: C
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In an economy where firms in most industries are monopolistically competitive firms, individual firms in each industry would produce ________ products and have a ________ share of industry output
A) differentiated; large B) differentiated; small C) standardized; large D) standardized; small
The foreign trade effect states that, ceteris paribus:
A. The quantity demanded of domestic goods falls when the domestic price level falls. B. The quantity demanded of imported goods falls when the price of imported goods falls. C. Foreign consumers have more incentive to buy American-made products when U.S. prices rise. D. The quantity demanded of domestic goods rises when the domestic price level falls.
If you advertise and your rival advertises, you each will earn $5 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $15 million and the non-advertising firm will earn $1 million. Which of the following is true?
A. A dominant strategy for firm B is to advertise. B. A Nash equilibrium is for both firms to advertise. C. A dominant strategy for firm A is to advertise. D. All of the statements associated with this question are correct.
In order to maintain a fixed exchange rate:
A. a country must constantly increase its money supply. B. Maintaining a fixed exchange rate is unrelated to the money supply. C. a country must constantly decrease its money supply. D. a country cannot change its money supply.