Economics and Strategy 4

Question 1

1) Firms sell a homogeneous product
2) Customers are indifferent about which firm they buy from
3) The level of a firm’s output is small relative to the industry’s total output
4) firm would sell the price at the equilibrium price (not higher)

Answer 1

Are key assumption of perfect competition

Question 2

In a purely competitive market

Answer 2

there are a very large number of firms who produce a standardized product.

Question 3

If prices are held artificially low

Answer 3

Demand will exceed supply

Question 4

adding personal consumption expenditures, plus gross private domestic fixed investment, plus government expenditures, adjusting for net exports and changes in business inventories

Answer 4

are the GDP calculation

Question 5

What are the risks of international transactions when it comes to cash flows analysis

Answer 5

exchange rate risk

Repatriation restrictions - affect the parent’s ability to get access to the cash of subsidiaries.