Explain why a corporation may find it advantageous to undertake greater investment when the value of its stock shares increase.
What will be an ideal response?
If the share price of a firm's stock increases, other factors constant, the firm may find the ratio of their market value to replacement cost is higher. As a result, the actual cost of financing investment is now lower since the market values investment higher than the actual cost. This will encourage greater investment on the part of the firm.
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Which of the following best explains the source of consumer surplus for a particular product?
a. Many consumers pay prices that are greater than the equilibrium price of the product. b. Many consumers would be willing to pay more than the market price for the product. c. Many consumers think the market price of the product is greater than its cost. d. Many consumers think the demand for the product is elastic.
This disease can be cured with antibiotics in the first two stages, but untreated, can cause damage to the heart, brain damage, mental disorders, deafness and blindness. What is the disease?
A. Chlamydia B. Gonorrhea C. Herpes D. Syphilis
Explain why the marginal product of labor shown in Moe’s Production Function with One Variable, Labor, is higher with two employees than it is with six.
What will be an ideal response?
Refer to the above graph. The shift of the budget line from AB to CD is consistent with:
A. decreases in the prices of Good 1 and Good 2 in equal proportion. B. an increase in the price of Good 1 and no change in the price of Good 2. C. a decrease in the price of Good 2 and no change in the price of Good 1. D. a decrease in money income.