Which of the following is true?
a. The buyer of a firm's stock is purchasing a fractional share in the firm's future net revenues.
b. When investors believe that a business decision by the management of a firm will increase the firm's future earnings, the price of the firm's stock will tend to rise.
c. Changing stock prices provide the board of directors and managers of a firm with a strong incentive to make good decisions and undertake productive projects.
d. All of the above are true.
D
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Free entry is said to exist in an industry when:
A) all firms entering an industry enjoy economies of scale. B) entry is unfettered by any special legal or technical barriers. C) equal amounts of inputs are available to all firms entering an industry. D) the government subsidizes costs for all new firms entering an industry.
The above table gives Sue's marginal utility schedules for sub sandwiches and Mountain Dew, the only products Sue consumes. Suppose initially the price of a sub sandwich is $4 each and the price of a Mountain Dew is $2 each. Sue's income is $12
If the price of subs rises to $6 each, Sue will consume A) more Mountain Dews. B) fewer subs. C) fewer Mountain Dews so that she can still afford to buy two subs. D) Both answers A and B are correct.