Assume Pyrotex Inc

question 14

Multiple Choice

Assume Pyrotex Inc.estimates the demand for its fireworks to be linear.If the current price charged by Pyrotex is such that the elasticity of demand is equal to 2.5,which of the following statements is true?

• A)Pyrotex will increase its revenues by decreasing the price of fireworks.
• B)Pyrotex will increase its revenues by increasing the price of fireworks.
• C)Pyrotex cannot increase its revenues by changing the price of fireworks.
• D)Not enough information is provided to determine whether or not Pyrotex is currently maximizing its revenues.

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Definitions:

Cash

Cash is a medium of exchange in the form of physical currency, such as coins and banknotes.

Target Shareholders

Individuals or entities that own shares in a company that is the subject of a merger or acquisition proposal.

Self-Tender Offer

A takeover-resistance strategy in which a target corporation offers to buy its shareholders’ stock.

Leveraged Buyout

The acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition.