A perfectly competitive market is in long run equilibrium. At present there are 100 identical firms each producing 5,000 units of output. The prevailing market price is $20. Assume that each firm faces increasing marginal cost. Now suppose there is a sudden increase in demand for the industry's product which causes the price of the good to rise to $24. Which of the following describes the effect of this increase in demand on a typical firm in the industry? A. In the short run, the typical firm increases its output but its total cost also rises. Hence, the effect on the firm's profit cannot be determined without more information. B. In the short run, the typical firm increases its output and makes an above normal profit. C. In the short run, the typical firm increases its output but its total cost also rises, resulting in no change in profit. D. In the short run, the typical firm's output remains the same but because of the higher price, its profit increases.
Answers: 1
Business, 22.06.2019 09:40
Alpha industries is considering a project with an initial cost of $8 million. the project will produce cash inflows of $1.49 million per year for 8 years. the project has the same risk as the firm. the firm has a pretax cost of debt of 5.61 percent and a cost of equity of 11.27 percent. the debt–equity ratio is .60 and the tax rate is 35 percent. what is the net present value of the project?
Answers: 1
Business, 22.06.2019 15:20
Gulliver travel agencies thinks interest rates in europe are low. the firm borrows euros at 5 percent for one year. during this time period the dollar falls 11 percent against the euro. what is the effective interest rate on the loan for one year? (consider the 11 percent fall in the value of the dollar as well as the interest payment.)
Answers: 2
Business, 22.06.2019 21:00
You are given the following information about aggregate demand at the existing price level for an economy: (1) consumption = $400 billion, (2) investment = $40 billion, (3) government purchases = $90 billion, and (4) net export = $25 billion. if the full-employment level of gdp for this economy is $600 billion, then what combination of actions would be most consistent with closing the gdp gap here?
Answers: 3
Business, 22.06.2019 21:10
In transportation model analysis, the stepping-stone method is used to: a. obtain an initial feasible solutionb. evaluate empty cells for possible degeneracyc. evaluate empty cells for potential solution improvementsd. identify a dummy origin pointe. balance supply and demand
Answers: 1
A perfectly competitive market is in long run equilibrium. At present there are 100 identical firms...
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