In the early 2000s, some argued that the Indian government impeded foreign investment with tariffs, investment caps, and tons of red tape. In terms of promoting or retarding economic growth, such policies:
A. increase growth because they keep people producing for the local market.
B. decrease growth because they slow the growth of capital.
C. increase growth because they stop exploitation by foreigners.
D. decrease growth because they cause inflation.
Answer: B
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The use of the same cost of capital (risk adjusted discount rate) for all capital projects in a corporation
A) is usually the correct procedure. B) is incorrect since different divisions of the corporation may be faced with different levels of risk. C) is incorrect since different capital projects, even in the same division, may be faced with different levels of risk. D) Both B and C
Answer the following statements true (T) or false (F)
1) Industry advertisements work to promote specific brands. 2) Industrywide advertising is an example of a public good. 3) A hot dog sold by a street hot dog vendor is an example of a public good. 4) The quantity of advertising that maximizes the industrywide joint profit, is the quantity that sets the industry wide marginal benefit equal to the marginal cost. 5) If Icy Treats is a large Italian ice dessert chain with franchises located throughout the United States, it is likely that each franchise will have the same advertising marginal benefit schedule.
Consider the same setup with the curved final exam as in the previous question. Now suppose the students move sequentially. Which best describes the outcome in the subgame-perfect equilibrium?
a. Brainiacs study and Numbskulls party regardless of who moves first. b. Brainiacs party and Numbskulls study regardless of who moves first. c. The party moving first studies. d. The party moving first parties.
If a business is earning an economic profit in a competitive market, it is
a. price gouging its customers. b. exploiting it workers. c. producing goods and services that are valued more highly than the resources required to produce them. d. producing goods and services in a market that is characterized by high entry barriers.