Question

 

1) T/F Takeover bids (and the potential for such bids) typically increase the incentive of corporate managers to perform more efficiently.

2) T/F Historically, the term "monopolistic competition" has not been used in economic theory when referring to competitive price-searcher markets.

3) T/F An investor will increase the investment risk of his or her portfolio by holding shares of many different business firms in many different industries.

4) T/F New issues of stocks and bonds are bought and sold by the investing public in the primary securities markets.

5) T/F To effectively "price discriminate" (and use differential pricing) a firm must not be able to prevent resale among its customers.

6) T/F An downward-sloping portion of a long-run average total cost curve is the result of diseconomies of scale

Answer 1

 

1)True

The potential for change in management makes employees perform better.

2)True

Monopolists are traditionally referred to as price searchers since they search the market demand curve for the profit maximizing price.

3)False

Diversification leads to lower risk

4)True

Initial public offerings are made in the primary market for the general public.

5)False

If consumers can resale,they can make a profit from price discrimination,which will create disgruntled customers when they realised they paid more than other consumers for the same item.

6)False

It is a result of economies of scale.