HW 01 Managerial Economics

HW 01 Managerial Economics - HOMEWORK 02 CHAPTER 1 Q 2: How...

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HOMEWORK 02 CHAPTER 1 Q 2: How would each of the following actions be expected to affect shareholder wealth? a. RJR Nabisco: Shareholder wealth would increase. b. Ford Motor Company: Shareholder wealth would decrease. c. General Motors: Shareholder wealth would decrease. d. Rising interests: Shareholder wealth would decrease. e. Import restrictions: Shareholder wealth would increase. f. Inflation: / g. Wonder Bread: Shareholder wealth would increase. Q3: The profit of the drug industry in 2000 is most likely due to the innovation theory of profit, perhaps combined with the temporary disequilibrium theory of profit (if the drug sector earned a rate of return above the normal return level due to circumstances on the market in the year 2000). Q5: ? Q6: a.If new foreign competitors enter the market, the shareholder value of the company might decrease because the company will have to compete with other companies and perhaps change its pricing policy (if it chooses that strategy) which will in turn bring less revenues (and less profit). b. Strict pollution control requirements might decrease the value of the firm because of the higher costs
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HW 01 Managerial Economics - HOMEWORK 02 CHAPTER 1 Q 2: How...

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