With asymmetric information among consumers and positive search ...

[cdr_15]

With asymmetric information among consumers and positive search costs c, all the other firms in the market are charging a monopoly price Pm. A firm may lower its price
 
  A) by less than c to attract more buyers when there are many firms in the market.
  B) by more than c to attract more buyers when there are many firms in the market.
  C) by less than c to attract more buyers when there are few firms in the market.
  D) by more than c to attract more buyers when there are few firms in the market.

Question 2

What are the major ways that the risks of exchange rate changes can be hedged against?
 
  What will be an ideal response?

[verrinzo]

Answer to Question 1

D

Answer to Question 2

Offsetting transactions in the same currency; buying or selling currency in the forward or futures markets; call or put options; and currency swaps.