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Merck, the producer of the patented cholesterol-lowering drug Zetia 1. Each of the following firms possesses market power. Explain its source. a. Merck, the producer of the patented cholesterol-lowering drug Zetia b. WaterWorks, a provider of piped water c. Chiquita, a supplier of bananas and owner of most banana plantations d. The Walt Disney Company, the creators of Mickey Mouse Business Management Assignment Help, Business ...

Other / Other 20 May 2016

Campbell Co. is trying to estimate its weighted average cost of capital (WACC). Which of the following statements is most correct 1. You must estimate the intrinsic value of Gallovits Technologies’ stock. Gallovits’s end-of-year free cash flow (FCF) is expected to be $25 million, and it is expected to grow at a constant rate of 8.5% a year thereafter. The company’s WACC is 11%. Gallovits has $200 million of ...

Other / Other 20 May 2016

Explain why De Beers faces a downward-sloping demand curve. 1. Suppose that De Beers is a single-price monopolist in the market for diamonds. De Beers has five potential customers: Raquel, Jackie, Joan, Mia, and Sophia. Each of these customers will buy at most one diamond—and only if the price is just equal to, or lower than, her willingness to pay. Raquel’s willingness to pay is $400; Jackie’s, $300; Joan’s ...

Other / Other 20 May 2016

Explain why the mayor’s estimate of a one-third loss of revenue is likely to be an overestimate 1. Skyscraper City has a subway system, for which a one-way fare is $1.50. There is pressure on the mayor to reduce the fare by one-third, to $1.00. The mayor is dismayed, thinking that this will mean Skyscraper City is losing one-third of its revenue from sales of subway tickets. The mayor’s economic adviser reminds her that she i ...

Other / Other 20 May 2016

Calculate the total revenue and the marginal revenue per album. 1. Download Records decides to release an album by the group Mary and the Little Lamb. It produces the album with no fixed cost, but the total cost of downloading an album to a CD and paying Mary her royalty is $6 per album. Download Records can act as a single-price monopolist. Its marketing division finds that the demand schedule for the album is as shown in the accompan ...

Other / Other 20 May 2016

Which of the following statements concerning preferred stock is most correct i. Which of the following statements about convertibles is true? a. The coupon interest rate on convertibles is generally higher than on straight debt. b. New equity funds are raised by the issuer when convertibles are converted. c. Investors are willing to accept lower interest rates on convertibles because they are less risky than straight debt. d. At i ...

Other / Other 20 May 2016

Is it a good idea for the monopolist to produce the 9th unit 1. A monopolist knows that in order to expand the quantity of output it produces from 8 to 9 units that it must lower the price of its output from $2 to $1. Calculate the quantity effect and the price effect. Use these results to calculate the monopolist’s marginal revenue of producing the 9th unit. The marginal cost of producing the 9th unit is positive. Is it a good idea ...

Other / Other 20 May 2016

Use a graph to illustrate the market for electricity distribution if the government sets price equal to average total cost. 1. Prior to the late 1990s, the same company that generated your electricity also distributed it to you over high voltage lines. Since then, 16 states and the District of Columbia have begun separating the generation from the distribution of electricity, allowing competition between electricity generators and betwe ...

Other / Other 20 May 2016

What is a possible danger if politics plays too big a role in accounting standard setting 1. Which of the following is not considered a component of generally accepted accounting principles? a. FASB Implementation Guides. b. Widely recognized industry practices. c. Articles published in CPA journals. d. AICPA Accounting Interpretations. 2. Financial accounting standard-setting in the United States a. can be described as a social ...

Other / Other 12 May 2016

Which of the following organizations selects members for the IASB 1. Which of the following organizations is not among the four international standard-setting organizations? a. The International Accounting Standards Committee Foundation (IASCF) b. The Standards Advisory Council (SAC) c. The International Financial Reporting Interpretations Committee (IFRIC) d. The Financial Executives Institute (FEI) 2. Which of the following organiz ...

Other / Other 12 May 2016