When considering setting the transfer price at the market price of a product similar to the intermediate good that is already available on the market
a. It is appropriate to ignore that the market price includes a margin above marginal cost
b. Consider whether the product on the market includes costly features your downstream division does not use
c. It is OK if the product on the market is inexpensive because its quality is lower than you use
d. If it is similar enough, it is justification for you producing it in-house
b
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Two identical firms are considering entering a new market that currently has no suppliers. The demand is large enough for both firms to make a positive profit. There are no fixed costs to enter
Explain how a simultaneous decision to enter on the part of the two firms will lead to a different outcome than a sequential entry decision.
Your cellular phone contract is due for renewal and the company offers you a new free phone. Since you want to use your new phone, you decide to recycle your old phone. Your action
a. Creates wealth by moving the phone from lower value use to higher value use b. Destroys wealth since you lose your phone c. Creates wealth by making you feel richer d. All of the above
Central banks can increase the money supply by:
a. Buying foreign exchange. b. Raising margin requirements. c. Increasing the discount rate. d. All of the above. e. None of the above.
The price elasticity of demand equals 1:
A. whenever the slope of a straight-line demand curve equals zero. B. at the midpoint of a straight-line demand curve. C. whenever the slope of a straight-line demand curve is greater than 1 in absolute value. D. whenever the slope of a straight-line demand curve is less than 1 in absolute value.