The Paradox of Leverage states that:
a. Excessive leverage is really just an illusion. It occurs when companiesmisestimate the value of their assets and equity.
b.When a single firm, in isolation, tries to de-lever its balance sheet, the net effect is often for its leverage to rise.
c. Leverage is a puzzle (i.e., a paradox) and always will be.
d. When a large portion of the market tries to de-lever its balance sheet, asset prices fall, thereby causing leverage to increase (not decrease).
e. None of the above.
.D
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Out of a set of feasible alternatives, an optimizer should choose the alternative with the:
A) highest net benefit. B) highest opportunity cost. C) lowest total cost, regardless of benefit. D) highest total benefit, regardless of cost.
Tastes are assumed to be identical across countries to rule out differences in demand determining the direction of trade
Indicate whether the statement is true or false
A similarity between monopoly and perfect competition is that both types of firms are able to earn economic profits in the short run.
Answer the following statement true (T) or false (F)
A firm's price rises. As a result, the
A) supply of labor to the firm decreases, that is, the labor supply curve shifts leftward. B) supply of labor to the firm increases, that is, the labor supply curve shifts rightward. C) demand for labor by the firm increases, that is, the labor demand curve shifts rightward. D) demand for labor by the firm decreases, that is, the labor demand curve shifts leftward.