Which of the following statements is true of bond markets?
a. A small firm can easily raise funds by issuing bonds because an investor can get a large percentage of ownership with considerably less amount of money.
b. A small firm can easily raise funds by issuing bonds because investors believe that small firms have a higher potential of growth.
c. A large and famous firm can easily raise funds by issuing bonds because investors are familiar with the company and are therefore more willing to consider investing in it.
d. A large and famous firm can easily raise funds by issuing bonds because only large firms can afford the minimum cost of entering the bond market.
c
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Explain how the availability of substitutes affects demand elasticity
What will be an ideal response?
Some economists argue that monopolistically competitive markets are inefficient because:
a. the firms earn economic profits in the long run. b. the firms' marginal costs and marginal revenues are not always equal. c. firms do not produce the output rate that would minimize their average total cost. d. barriers to entry are high.