All of the following might explain a firm offering quantity discounts except:

All of the following might explain a firm offering quantity discounts except:
 a. the lower costs of handling large orders.
  b. an inelastic demand for the good.
  c. a monopoly power in this market.
  d. the adoption of a sales maximization strategy.

QUESTION 2

All of the following except ____ are shortcomings of cost-benefit analysis.
 a. difficulty in measuring third-party costs
  b. difficulty in measuring third-party benefits
  c. failure to consider the time value of benefits and costs
  d. difficulty of accounting for program interactions
  e. a and b

QUESTION 3

Adverse selection in insurance requires that
 a. all people face the same risk
  b. potential customers facing more risk are no more interested in purchasing insurance
  c. people are not risk averse
  d. insurers cannot tell higher risk people from lower risk people

QUESTION 4

Perfect (first degree) price discrimination:
 a. is a common occurrence in situations with many buyers.
  b. occurs fairly often in situations with only a few buyers.
  c. is only observed in competitive markets.
  d. rarely occurs because firms do not have sufficient information to differentiate among specific buyers.

QUESTION 5

The ____ method assumes that the cash flows over the life of the project are reinvested at the ____.
 a. net present value; computed internal rate of return
  b. internal rate of return; firm's cost of capital
  c. net present value; firm's cost of capital
  d. net present value; risk-free rate of return
  e. none of the above

QUESTION 6

Adverse selection in insurance requires that
 a. all people face the same risk
  b. potential customers facing more risk are no more interested in purchasing insurance
  c. people are risk averse
  d. insurers can tell higher risk people from lower risk people

QUESTION 7

A price discriminating monopolist having identical costs in two separated markets should charge a higher price in that market:
 a. which has a higher demand.
  b. which has a more elastic demand.
  c. which has a less elastic demand.
  d. which has a higher marginal revenue.

QUESTION 8

Beta in the CAPM is ____.
 a. one measure of the systematic risk of a stock
  b. estimated as the slope of a regression line between an individual security's returns and returns for the market index.
  c. useful in estimating the firm's cost of debt capital
  d. a and b only
  e. a, b, and c