9. If profit-seeki ng major oil companies began to use current profits from the

Question

9. If profit-seeki ng major oil companies began to use current profits from the oil business to buy department stores and hotel chains, economic analysis suggests that a. oil company profits were high relative to other possible investment opportunities. b. oil company executives thought profits from investment outside the oil industry would be lower than oil-industry investments. oil company executives must believe these other investments will be more profitable than investments in the oil industry. the government would be justified in subsidizing oil companies on grounds of economic efficiency. c. d.

Explanation / Answer

"C"

oil company executives must believe these other investments will be more profitable than the investment in the oil industry. If these investments in other industries are not as profitable as the oil industries themselves then no executive will invest in them at all.

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