Applying the Efficient Market Hypothesis (EMH) to capital budgeting, which of the following statements is correct?   

Group of answer choices

In an efficient market the NPV for projects should on average be positive.

Existing large firms can be considered evidence that the EMH is true.

Existing large firms may exist because they may not have played the game long enough meaning they may still go insolvent.

Firms can be considered to be a collection of projects; and existing firms a collection of negative
NPV projects.

If firms produce new information or technology, this could never be a reason for a firm to produce a NPV.

The editor of a textbook publishing company is trying to decide whether to publish a proposed business statistics textbook. Information on previous textbooks published indicate that 10% are huge​ successes, 20% are modest​ successes, 40% break​ even, and 30 % are losers.​ However, before a publishing decision is​ made, the book will be reviewed. In the​ past, 99 %of the huge successes received favorable​ reviews, 60% of the moderate successes received favorable reviews, 50 % of the​ break-even books received favorable​ reviews, and 30 % of the losers received favorable reviews. Complete parts​ (a) and​ (b).

a. If the proposed textbook receives a favorable​ review, how should the editor revise the probabilities of the various outcomes to take this information into​ account?

-The probability that if the proposed textbook receives a favorable​ review, the book will be a huge success is _________ (round to 3 decimal places as needed)

-The probability that if the proposed textbook receives a favorable​ review, the book will be a modest success is_________(round to 3 decimal places as needed)

-The probability that if the proposed textbook receives a favorable​ review, the book will break even is ________ (round to 3 decimal places as needed)

-The probability that if the proposed textbook receives a favorable​ review, the book will be a loser is _________(round to 3 decimal places as needed)

b. What proportion of textbooks receives favorable​ reviews?

-The proportion of textbooks that receive a favorable reviews is_______ (round to 3 decimal places as needed)

In each case below, identify the effect on the demand for ice cream. a. An increase in the price of sorbet (substitute) b. An increase in the price of ice cream cones (complement) c. A decrease in consumer income d. A decrease in advertising by the producers of ice cream e. A decrease in population

Suppose a consumer has 60 hours per week to allocate between work and play, and the hourly wage rate is $30. She chooses to have 20 hours of leisure and 40 hours of working. The government imposes a $10 per hour income tax. With the tax, the consumer chooses to have 25 hours of leisure.

On a graph with “leisure hours per week” on the horizontal axis and “consumption in dollars” on the vertical to illustrate your weekly budget constraint, illustrate your weekly budget constraint. Label with numbers and indicate the endowment bundle, the optimal bundle before tax, the optimal bundle after tax and tax revenue collected by the government.

PLEASE INCLUDE THE GRAPH LIKE THE QUESTION ASKS

What are the main components of money supply? (b) How can the Bank of Ghana use its prime rate, open market operations and the required reserve ratio to control money supply? c). State and briefly explain the main objectives of monetary policy? d) What is the relation between the required reserve ratio and the money multiplier?

For each question state whether the statement in bold is true, false or uncertain. Give a precise and concise justification for your answer. Your justification may include graphs if necessary.

(a) If leisure is normal, the labor supply curve is always “backward bending.”

(b) Sam receives half of his income in wages and half of his income in dividends. He currently takes negligible leisure. Sam would be indifferent between a 5% increase in his wage rate and a 5% increase in his dividend income.

Explain how each of the following affects the optimal method of acquiring an input. In each case, be specific about the method of acquisition and provide explanations.

a) A complex contracting environment

b) A specialized investment

c) Opportunism

d) Bargaining costs

e) The costs of bureaucracy

f) Gains from specialization

Donald loves gambling. His favorite gambling activity is going to the horse tracks and betting on his favorite horse, Betty. Donald's weekly income is $100, which he takes to the tracks. Donald can only purchase $50 lottery tickets on Betty finishing 1st. Betty's probability of winning each race is .5 and in case of a victory Donald gets $100 per every ticket bought while he gets nothing when Betty doesn’t end up in the first place. 1. Suppose that Donald can only bet multiples of $50. Calculate the expected value of buying (i) no tickets, (ii) 1 ticket, and (iii) 2 tickets. Don’t forget to take into account that he has an initial wealth of $100. Is the reward of any of the options more worthy than the other? 2. Donald's utility function is u(x) = x 2 . Find his expected utility from buying (i) no tickets, (ii) 1 ticket, and (iii) 2 tickets. How many tickets will he buy? 3. Suppose Donald’s family wants to stop him from going to the horse tracks. They want to design a conditional cash transfer program in which Donald receives a weekly allowance with the condition of not going to the horse tracks. How much should this allowance be to convince Donald not to buy 2 tickets each week?

1) Suppose that long-run average cost increases from 50 to 75 when output increases from 10 to 20. Is the firm experiencing economies of scale, diseconomies of scale, or constant returns to scale.

The firm is experiencing ________________________________________.

2) Which of the four basic market structures best describes the market for hardware where you live? This is the market where you purchase nails, fertilizer,

1. Suppose that a monopoly faces the demand, marginal revenue, and cost schedules below.

1. What quantity maximizes profit?
   
   The monopoly Q = ____
   
2. What price maximizes profit?
   
   The monopoly P = ____
   
3. What is the maximum profit?
   
   The maximum profit is $____________.
   
4. What is the socially efficient quantity?
   
   The socially efficient Q = _____

What is the deadweight loss when the monopoly produces the monopoly Q instead of the socially efficient Q?

The deadweight loss = $_______

a. The price elasticity of a good is -4.2. What does this mean? What would happen to the total revenue collected if prices were to increase by 10% and explain your answer.

b. The income elasticity of a good is 0.25. What does this mean? What can we conclude about this good and explain how you came to this conclusion?

c. The cross-price elasticity of a good is -1.5. What does this mean? What can we conclude about this good and explain how you came to this conclusion?

How do entrepreneurs engage in active search to discover opportunities? What role does alertness play in discovering opportunities?

Reflect on the idea of product. What is a product? When people buy products, what are they really buying?