Some firms find conglomerate mergers advantageous since they permit firms to:
A. take advantage of economies of scope.
B. pool cash flows resulting from products with low and high periods.
C. reduce input costs.
D. take advantage of economies of scale.
Answer: B
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Explain why the average cost curve for the long run differs from that for the short run.
What will be an ideal response?
Suppose the only characteristic of beer that a consumer cares about is alcohol content. Currently, Bud Light and Miller Lite both have the same alcohol content. a. Illustrate the consumer's indifference curves in a graph with ounces of Miller Lite on the horizontal and ounces of Bud Light on the vertical axis. b. Suppose that the producers of Bud Light lower the price of Bud Light. How will your answer to (a) change?
c. Suppose that the producers of Bud Light lower the alcohol content of their beer by 50%. How will your answer to (a) change? d. Since we identify tastes with indifference maps, would you say that the consumer's tastes have changed in (b) or (c)? e. How could we change the units we use to measure Miller Lite in order to get the indifference map in (c) to again look like the one in (a)? What will be an ideal response?
Does the Nash equilibrium yield maximum profit?
a. Yes, because they are each getting the maximum payoff b. No, because they could do better by pricing high c. Yes, because they are both making sales d. No, because they both hate selling ice cream
Which of the following four elements contribute to GDP in the expenditure approach?
a. Consumption spending, private investment, government purchases, net exports b. Consumption spending, business investment, government purchases, imports c. Consumption of services, private investment, government consumption, exports d. Consumption of goods, private investment, government investment, government consumption e. Consumption of durable goods, private investment, government purchases, net exports