Assume that you are the new CEO of a major corporation that has five major product lines each run as separate corporations
You discover that if you invested the company's money outside of the firm that it could earn a 15% rate of return on the investment. You tell all the presidents of each of these subsidiary companies that in order for them to remain with the company that their return on capital must equal to or exceed 15% rate of return. Use two economic principles discussed in chapter 1 to explain why the CEO's advice is sound.
Essentially there is a high opportunity cost associated with investing large sums of money in a corporation when the rate of return is higher if invested elsewhere. By getting the presidents of each of the subsidiary companies to push the rate of return on their capital upwards the stockholder's money is being more efficiently managed.
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Price discrimination only occurs under monopoly.
Answer the following statement true (T) or false (F)
In an open economy, Y = C + I + G + NX. From this we may infer that ________
A) output is greater in an open economy than in a closed economy B) the condition for goods market equilibrium is that S = I + G + NX C) net exports can be zero only if the domestic real interest rate is equal to the world real interest rate D) if saving is greater than zero, NX cannot be zero E) none of the above
Refer to Table 8-27. What is the level of disposable personal income for this economy?
A) $1,080 billion B) $1,010 billion C) $980 billion D) $860 billion
Market equilibrium occurs where supply equals demand
Indicate whether the statement is true or false