Exam 17: Macroeconomic and Industry Analysis

Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy enters a recession, the after-tax profit of firm C will be

If a firm's sales decrease by 15%, and profits decrease by 20% during a recession, the firm's operating leverage is

A trough is

Investors can ______ invest in an industry with the highest expected return by purchasing ______.

A variety of factors relating to industry structure affect the performance of the firm, including

Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy is strong, the tax of firm C will be

An example of a defensive industry is

A rapidly growing GDP indicates a(n) ______ economy with ______ opportunity for a firm to increase sales.

________ is a proposition that a strong proponent of supply-side economics would most likely stress.

An example of a negative demand shock is

Supply-side economists wishing to stimulate the economy are most likely to recommend

Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets. Calculate firm A's degree of operating leverage.

The "normal" range of price-earnings ratios for the S&P 500 Index is

If interest rates decrease, business investment expenditures are likely to ______, and consumer durable expenditures are likely to _________.

Which of the following are key economic statistics that are used to describe the state of the macroeconomy?I) Gross domestic productII) The unemployment rateIII) InflationIV) Consumer sentimentV) The budget deficit

In the start-up stage of the industry life cycle,

In the decline stage of the industry life cycle,

The "real," or inflation-adjusted, exchange rate is

A declining GDP indicates a(n) ______ economy with ______ opportunity for a firm to increase sales.

Japan announces a tariff on rice imported from China. In doing so, the resulting impact on consumers is similar to that of ___________.