Problem

Consider two firms producing DVDs. One uses a highly automated robotics process, while t...

Consider two firms producing DVDs. One uses a highly automated robotics process, while the other uses human workers on an assembly line and pays overtime when there is heavy production demand.

a. Which firm will have higher profi ts in a recession? In a boom?

b. Which firm’s stock will have a higher beta?

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Solutions For Problems in Chapter 12