Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Questions [5) and [7) multiple choice. Choose the single best answer and explain your choice . (5 points) According to a Wall Street Journal article,

image text in transcribed
image text in transcribed
Questions [5) and [7) multiple choice. Choose the single best answer and explain your choice . (5 points) According to a Wall Street Journal article, percapita beef consumption in the United States has fallen close to thirty percent since the mid1970s. Assume that the beef industry is perfectly com petitive, that it was in longrun equilibrium in the mid192703, and that it is a constantcost industry.1 Then, this decrease in demand implies that in the new longrun equilibrium (compared to the original longrun equilibrium}: A. Market price, market output, the number of rms, and individual rm output all rise in the long run. E. Market price, marlcet output, the number of rms, and individual rm output all fall in the long run. '3. Market price, market output, and the number of rms will decline; individual rm output falls in the shortrun and then returns to its original equilibrium level in the long run. D. Market price declines in the shortrun, but eventually returns to its original longrun equilib rium level; market output declines in the long mm; individual rm output falls in the short run and then returns to its original longrun equilibrium level; there are tower rms in the long run. E. Market price declines in the short run, but eventually returns to its original longrun equilil} rium level; market output declines in the long run; individual rm output declines in the long run; there are fewer rms in the long run. . Following a freak accident involving one of its products, DPD Inc. was sued by one of its customers. The customer's attorneys offered to settle and drop the suit if DPD would agree to pay their client $500,000. DPD's lawyers advised DPD that, in their opinion, DPD had a 50% chance of winning its case at trial. If they lost, however, damages were likely to be set at $500,000. Furthermore, there was some chance that the jury would nd them negligent and assess punitive damages. In fact, the lawyers believed that, if DPD lost, there was a 10% chance that the jury would nd them negligent and ne them $2 million instead of the $500,000. DPD's lawyers estimate that legal fees for taking the case to trial [fees that DPD must pay itself under US law regardless of whether it wins or loses) would total $125,000. Given these gures, DPD would never settle under any risk preference. go to trial if they are risk neutral. agree to settle for $500,000 if they are risk neutral. only agree to settle for less than $450,000 if they are risk averse. settle for $450,000 if they are risk loving. EFF}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Strategic Management And Business Policy: Globalization, Innovation And Sustainability

Authors: Thomas L. Wheelen, J. David Hunger, Alan N. Hoffman, Chuck Bamford

14th Edition

0133126145, 978-0133126143

Students also viewed these Economics questions

Question

How are Engagement Letters dealt with in a group situation?

Answered: 1 week ago