Part A) Which of the following are likely to increase the value of the firm, bas
ID: 1162829 • Letter: P
Question
Part A) Which of the following are likely to increase the value of the firm, based on the shareholders wealth-maximization model?
A. The interest rate increases substantially.
A previously nonunion workforce votes to unionize.
The government implements strict pollution control requirements.
A technological breakthrough allows the firm to reduce its cost of production.
Pard B)If consumers foresee the price of electric car will drop significantly in the near future, then the current market _______ of electric car will _______.
demand; increase
demand; decrease
supply; decrease
price; increase
A. The interest rate increases substantially.
B.A previously nonunion workforce votes to unionize.
C.The government implements strict pollution control requirements.
D.A technological breakthrough allows the firm to reduce its cost of production.
Explanation / Answer
Part-A Answer is D. The technological breakthrough allows the firm to reduce its cost of production. Part-B Answer is B. Demand; decrease Explanation: As the expectation of price to be fall in future, the consumer will curtail its current demand to consume it future. Thus current demand will decline.