A firm that sells goods to foreign countries on a regular basis can avoid exchange-rate risk by
A) buying stock options.
B) selling puts on financial futures.
C) using a foreign exchange swap.
D) buying swaptions.
C
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All of the following are disadvantages of cost-plus pricing except
A) Allocating and apportioning business overheads to individual products could be somewhat arbitrary. B) If the industry comprises identical firms (with identical costs), markups could be consistent among firms leading to no one firm having a competitive edge in terms of price. C) It ignores the price elasticity of demand: for example, it may be possible to increase profits by raising or lowering price. D) The business has less incentive to cut or control costs: if costs increase, then selling prices increase. Consequently, this might further erode a firm's competitiveness.
If a CEO can type faster than her secretary, then
A) the CEO has a comparative advantage in typing. B) the CEO has neither a comparative advantage in typing, nor in management. C) the CEO should still continue performing CEO duties since the CEO has a comparative advantage in management, and the secretary should continue typing. D) the CEO should still continue performing CEO duties as well as typing since he has a comparative advantage in both management, and typing.
Unintended costs that are imposed upon third parties as a result of an economic activity are called
a. marginal costs b. direct costs c. negative externalities d. positive externalities e. positive costs
Which of the following would both make a worker's wage higher than otherwise?
a. the work is safe, the employer pays an efficiency wage b. the work is safe, the employer does not pay an efficiency wage c. the work is dangerous, the employer pays an efficiency wage d. the work is dangerous, the employer does not pay and efficiency wage