Shareholder voting rights should:
A. not be assigned to a founder who values control.
B. be assigned to those with residual-claim rights.
C. not be granted to management because of the agency problem.
D. be assigned only to small shareholders.
Answer: B
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Suppose you have $200 with which you can buy shares of stock from two companies: ABC Hot Chocolate Company and XYZ Lemonade. Each company's stock currently sells for $100 per share. If the temperature next year is lower than average, the stock price for ABC will increase by $20, and the stock price for XYZ will not change. If the temperature next year is higher than average, the stock price for XYZ will increase by $20, and the stock price for ABC will not change. There is a 50% chance that it will be colder than average next year, and a 25% chance that it will be warmer than average. If you purchase two shares of ABC stock and no shares of XYZ stock, your expected gain will be ________.
A. $0 B. $20 C. $40 D. $30
Laissez-faire refers to a situation in which there is ____ with the workings of the market system.
A. zero consumer involvement B. zero government interference C. minimal government interference D. complete government interference
The aggregate supply curve normally
a. slopes downward and to the right due to higher resource prices. b. has a horizontal slope equal to zero. c. is very steep in the lower portion and flatter in the upper portion. d. slopes upward to the right due to short-run fixed costs of production.
In a long-run equilibrium, firms in both perfectly competitive markets and monopolistically competitive markets produce a quantity below the efficient scale of production
a. True b. False Indicate whether the statement is true or false