Suppose that the price elasticity of demand for wheat is known to be -0.75. Will a good wheat crop (which increases the supply of wheat) be likely to increase or decrease the revenues of farmers? Carefully explain
What will be an ideal response?
A good wheat crop that increases the supply of wheat will cause the equilibrium price of wheat to decrease (and quantity to increase). Since demand is inelastic, total revenues will fall, as the percentage change in quantity will be less than the percentage change in price.
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Suppose a bank has $10 million in capital, $100 million in assets, and after-tax profit of $2 million? what is its return on assets? What is its return on equity?
What will be an ideal response?
A supply curve describes
a. the relationship between price and quantity demanded b. the relationship between price and quantity supplied c. the relationship between a group of buyers and sellers d. none of the above
Buying insurance and then never making a claim:
A. is considered by economists to be irrational behavior. B. means buying the insurance was a bad decision. C. does not mean buying the insurance was a bad decision. D. is a poor use of money.
It's as simple as this: Bankers hope to make profit by
a. holding people's money at low interest rates and lending it out at higher interest rates b. holding people's money at high interest rates and lending it out at lower interest rates c. charging for bank services such as check clearing and ATM services d. keeping excess reserves in case of a bank run e. charging people to use demand deposit accounts