Ch 17 revised 2005

Ch 17 revised 2005 - CHAPTER 17: MACROECONOMIC & INDUSTRY...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
7. a. The robotics process entails higher fixed costs and lower variable (labor) costs. Therefore, this firm will perform better in a boom and worse in a recession. For example, costs will rise less rapidly than revenue when sales volume expands during a boom. b. Because its profits are more sensitive to the business cycle, the robotics firm will have the higher beta. 8. a. Housing construction (cyclical but interest-rate sensitive): (iii) Healthy expansion b. Health care (a non-cyclical industry): (i) Deep recession c. Gold mining (counter-cyclical): (iv) Stagflation d. Steel production (cyclical industry) (ii) Superheated economy 9. a. Oil well equipment: Book answer: Relative decline (Environmental pressures, decline in easily-developed new oil fields) Note: Actually, oil demand is not decreasing and it may require more equipment, not less to extract the same amount of oil per year. b.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/02/2011 for the course FIN 300 taught by Professor Staff during the Summer '08 term at Ill. Chicago.

Page1 / 2

Ch 17 revised 2005 - CHAPTER 17: MACROECONOMIC & INDUSTRY...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online