The supply of product X is perfectly inelastic if the price of X increases by ________ and, as a result of the price change, the quantity supplied ________
A. 7%; increases by 5%.
B. 10%; stays the same.
C. 8%; increases by 8%.
D. 5%; increases by 7%.
Answer: B
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Why are present value calculations used in real options?
A shoe manufacturer wants to maximize its total revenue. When the manufacturer charges $25 per shoe, consumers demand 50 shoes per day. The manufacturer knows that the demand for shoes is highly elastic. In the given scenario, which of the following statements is true?
a. To maximize total revenue, the manufacturer should decrease the price of its shoes, because the percentage increase in quantity demanded will more than offset the decrease in price. b. To maximize total revenue, the manufacturer should decrease the price of its shoes, because the percentage increase in quantity demanded will not offset the decrease in price. c. To maximize total revenue, the manufacturer should increase the price of its shoes, because the increase in price will more than offset the decrease in quantity demanded. d. To maximize total revenue, the manufacturer should increase the price of its shoes, because the increase in price will not offset the decrease in quantity demanded.
?For a mortgage lender that makes mortgage loans to borrowers, which one of the following would be an example of adverse selection?
a. After the loan has been made, individuals become careless with their finances
b. Individuals most likely to default are the ones most likely to apply for the loan
c. Borrowers investing their loan proceeds differently than the bank requires
d. None of the above
A good or service or a resource is rival if
A) it is possible to prevent someone from enjoying its benefits. B) it is not possible to prevent someone from enjoying its benefits. C) its use by one person decreases the quantity available for someone else. D) its use by one person does not decrease the quantity available for someone else.