Shares of Hapolonian Industries (HAP) and Zoe Incorporated (ZINC) react differently to the state of the economy. When the economy is doing well, HAP delivers a return of 10 percent and ZINC delivers a return of 5 percent. When the economy is not doing well, HAP delivers a return of 8 percent and ZINC delivers a return of 8 percent. The probability that the economy is doing well is 60 percent. If Roger, an investor, wants an expected return of 8.9 percent, his portfolio should be...

a.Roger cannot achieve his goal because ZINC's expected return is only 6.2 percent.

b.89 percent HAP and 11 percent ZINC.

c.85 percent HAP and 15 percent ZINC.

d.90 percent HAP and 10 percent ZINC.

If AVC is increasing and ATC is decreasing, then...

a.AVC < ATC < MC

b.ATC < MC < AVC

c.MC < AVC < ATC

d.AVC < MC < ATC

A perfectly competitive firm faces a market price of $5. At its current production level, its MC = 4, AC = $7 and AVC = $4. The firm should...

a.Maintain production.

b.Increase production.

c.Decrease production.

d.Shut down.