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The fully allocated cost of a product is $10. If the price
elasticity of demand for the product
is 2,
then the firm's optimal markup is
Question 11
A firm plans to raise $4 million by borrowing at an interest
rate of 16% and to raise $1
million by issuing common stock. The firm's stock has a beta
coefficient of 2, the risk free
interest rate is 6%, the average rate of return on stocks is
9%, and the marginal tax rate is
25%. What is the firm's composite cost of capital?
Question 12
A firm that uses profits earned in one market to sell a
product or service below its average
variable cost in another market is engaged in
Question 13
In game theory, a dominant strategy refers to a choice
Question 14
Which of the following is a device that controls imports and
generates government