The larger the proportion of the consumer's budget that is spent on a product, the more elastic that consumer's demand for the product will be
a. True
b. False
A
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Imagine that Wingate National is a new bank, and that the legal reserve requirement is 10 percent. If it accepts a $1,000 deposit, then the maximum value of the loans it makes is
a. $0 b. $90 c. $100 d. $900 e. $910
A company is called insolvent when a. there is a rapid decline in an asset price
b. its debts exceed the value of its assets. c. there is a decline in confidence in the company. d. it experiences a credit crunch.
Perfectly competitive markets are efficient because
A) they always reach equilibrium. B) firms in the market are price takers. C) the cost to society for producing the goods is exactly equal to the value that society places on the good. D) the long run equilibrium assures that the prices of resources will not increase.
The Commons Problem arises because
A) firms don't maximize profits. B) social and private incentives are not aligned and property rights are missing. C) social cost equals private cost and property rights are missing. D) social benefit equals private benefit and property rights are missing.