There are two existing firms in the market for computer chips. Firm A knows how to reduce the production costs for the chip and is considering whether to adopt the innovation or not. Innovation incurs a fixed setup cost of C, while increasing the revenue. However, once the new technology is adopted, another firm, B, can adopt it with a smaller setup cost of C/3. If A innovates and B does not, A earns $30 in revenue while B earns $10. If A innovates and B does likewise, both firms earn $20 in revenue. If neither firm innovates, both earn $10. If C = 12, which is the perfect equilibrium of the game?
A. Neither firm innovates.
B. A innovates, B does not.
C. A innovates, B innovates.
D. None of the answers is correct.
Answer: A
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The three main types of securities market organization are
A) primary, secondary, and tertiary markets. B) stock, money, and bond markets. C) public, private, and government markets. D) auction, dealer, and brokered markets.
In Table 13-1, if the required reserve ratio is 10 percent, what will happen to the money supply? Use the oversimplified money multiplier in your calculations
a. The money supply will decrease by $100 million. b. The money supply will decrease by $10 million. c. The money supply will not change. d. The money supply will increase by $10 million. e. The money supply will increase by $100 million.
The long-term financing dimension of financial management deals with the selection, issuance, and management of long-term debt and equity.
a. true b. false
Occupational licensing has much the same effect as:
A. inclusive unionism. B. exclusive unionism. C. bilateral monopoly. D. monopsony.