A firm has to choose between projects X and Y. Project X's internal rate of return is positive. If the cash flow of project Y is discounted at project X's internal rate of return, this firm will
A) choose project X if the net present value of project Y is positive.
B) choose project X if the net present value of project Y is negative.
C) choose project Y if the net present value of project Y is positive.
D) choose project X regardless of the net present value of project Y.
Question 2
If a firm uses introductory pricing, it is likely ________ short run profit and ________ long run profit.
A) minimizing; maximizing
B) maximizing; maximizing
C) maximizing; reducing
D) reducing; maximizing
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Consider the production function ( ) 0.5 0.5 Y = AK L . Suppose both saving rate (s) and the ...