32. âA risk premium is
-âthe difference between the earnings of a low risk asset and a high risk asset
-âpremium paid to a security holder to compensate him for bearing a higher risk â
-both A&B
-ânone of the above
33.âA sudden rise in the market demand in a competitive industry leads to
-âA short run market equilibrium price higher than the original equilibrium
- âA market equilibrium higher than the short run price
- âSome firms exiting the market
- âAll of the above
34.The IO Economics perspective locates the source of competitive advantage for a firm at theâ
- âIndividual firm level
- âIndustry level
- âCustomer Level
- âNone of the above
35. Supplier power tends to be higher when
âSuppliers are concentrated
- âThere are high costs to switching between suppliers
- âBoth A&B
- âNone of the above
36.âTo stay one step ahead of the forces of competition, a firm can adopt any one of these strategies except
- âCost reduction
- âProduct differentiation
- âOperating where marginal benefits equal marginal costs
- âDevelop non-fungible valuable resources
32. âA risk premium is
-âthe difference between the earnings of a low risk asset and a high risk asset
-âpremium paid to a security holder to compensate him for bearing a higher risk â
-both A&B
-ânone of the above
33.âA sudden rise in the market demand in a competitive industry leads to
| -âA short run market equilibrium price higher than the original equilibrium |
| - | âA market equilibrium higher than the short run price |
| - | âSome firms exiting the market |
| - | âAll of the above 34.The IO Economics perspective locates the source of competitive advantage for a firm at theâ
|
Related textbook solutions
Related questions
30.The indifference principle states thatâ
| -âIf an asset is mobile, then in the long run, it will be indifferent about where it is used |
| - | âIn the long run, a mobile asset will make the same profit, no matter where it goes |
| - | âIf an asset is mobile, then in the long run, it would stay with the first user |
| âOnly A&B 31.âIn equilibrium, low risk assets earn a _______return than high risk assets
|
11)
A constant-cost, perfectly competitive industry experiences a permanent increase in demand. In adjusting to this change, what will happen to the price of the product?
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It will increase in the short-run and then decrease in the long-run, but end up above its original level in the long-run. |
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It will increase in the short-run and then increase further in the long-run. |
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It will increase in the short-run and then decrease back to its original level in the long-run. |
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It will increase in the short-run and then decrease below its original level in the long-run. |
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It will decrease in the short-run but return to its original level in the long-run. |
12)
Assume that a perfectly competitive firm owns or rents a higher-quality resource that results in lower average total costs and higher economic profits in the short run. What will happen in the long-run?
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The price of the higher-quality resource will be bid upward resulting in economic rents and equalizing costs across firms. |
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New firms will enter and compete with any excess profits away. |
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None of the other answers is correct. |
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The government will tax away any excess profits. |
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The firm with the higher-quality resource will earn positive economic profits in the long run. |
13)
Which of the following are characteristics of long-run equilibrium?
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No firm has an incentive to change its level of output. |
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No firm has an incentive to change its plant size. |
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Economic profit is zero |
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All of the above |
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None of the above |
14)
Which of the following statements is consistent with the textbookâs analysis of perfect competition?
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Although individual perfectly competitive firms wonât pay to advertise, the industry as a whole may well advertise. |
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Higher costs for one firm in the industry will result in that firm charging a higher price than the other firms in the industry. |
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If all the firms in an industry charge an identical price for their products, this is clear evidence of collusive behavior. |
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All of the above |
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None of the above |
15)
The assumptions that define the market structure known as monopoly include which of the following?
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High barriers to entry. |
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There is one seller. |
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There are no close substitutes available. |
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All of the above |
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None of the above |
