Which of the following is FALSE?
a. To reduce cannibalization among products, reposition a product so that it does not directly compete with the other
b. After acquiring a substitute product, raise prices on both the products
c. After acquiring a complementary product, raise prices on both the products
d. All of the above
QUESTION 2You and two partners start a company. However, your partners play no role in running the company. You spend all your time managing the business. The time that you could have spent working for someone else and earning wages instead of running the business is your:
a. explicit cost.
b. marginal cost.
c. sunk cost.
d. opportunity cost.
QUESTION 3Which of the following is true?
a. To reduce cannibalization among products, reposition a product so that it does not directly compete with the other
b. After acquiring a substitute product, lower prices on both the products
c. After acquiring a complementary product, raise prices on both the products
d. All of the above
QUESTION 4If a firm is earning negative accounting profits, it implies
a. That the firm's economic profits are necessarily zero
b. That the firm's economic profits are necessarily positive
c. That the firm's economic profits are necessarily negative
d. Accounting profits alone cannot determine economic profits
QUESTION 5Which of the following is true?
a. To reduce cannibalization among products, reposition a product so that it does not directly compete with the other
b. After acquiring a substitute product, raise prices on both the products
c. After acquiring a complementary product, lower prices on both the products
d. All of the above
QUESTION 6If a firm is earning negative economic profits, it implies
a. That the firm's accounting profits are necessarily zero
b. That the firm's accounting profits are necessarily positive
c. That the firm's accounting profits are necessarily negative
d. Economic profits alone cannot determine accounting profits
QUESTION 7If a hot dog manufacturer acquires a bakery that primarily bakes hot dog buns, you would likely see
a. Higher prices for the hot dogs but lower prices for the buns
b. Higher prices for the buns but lower prices for the hot dogs
c. Higher prices for both the hot dogs and the buns
d. Lower prices for both the hot dogs and the buns
QUESTION 8All of the following costs are included in the calculation of accounting profit, except
a. Interest payments on borrowed funds
b. Costs paid to suppliers for product ingredients
c. Opportunity cost of capital
d. Depreciation expenses related to investments in buildings and equipment
QUESTION 9If an ice-cream manufacturer acquires a frozen yogurt producer, you would likely see
a. Lower prices for both the ice cream and the frozen yogurt
b. Higher prices for both the ice cream and the frozen yogurt
c. Higher prices for ice cream, but lower prices for frozen yogurt
d. Higher prices for frozen yogurt but lower prices for ice cream