If a Local Government Began Licensing Funeral Homes in the Area

question 53

Multiple Choice

If a local government began licensing funeral homes in the area, effectively making them into a cartel, we would expect

• A) the price of funeral services to rise, and the number of funerals performed in the area to fall.
• B) the price of funeral services to rise, and the number of funerals performed in the area to increase as well.
• C) the price of funeral services to fall, and the number of funerals performed in the area to increase.
• D) the price of funeral services to fall, and the number of funerals performed in the area to fall as well.

Learn about the components of return on investment (ROI) and how they provide a comprehensive view of divisional performance.

Analyze the calculation and significance of investment turnover in evaluating performance.

Understand the purpose and method of allocating indirect operating expenses to departments.

Identify how transfer pricing between divisions can enhance overall company income.

---

Definitions:

Hedge Ratio

The ratio of the size of a position in a hedging instrument to the size of the position being hedged.

Strike Price

The price at which the holder of an option contract has the right to buy or sell the underlying asset.

Underlying Stock

The stock on which a derivative instrument, such as an option or future, is based.

Implied Volatility

A measure of the market's forecast of a likely movement in a security's price and is used to price options contracts.