Increases in a borrower's net worth:
A. reduces the problem of moral hazard.
B. reduces the problem of adverse selection.
C. lowers the information costs of lending.
D. all of the answers given are correct.
Answer: D
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Which of the following statements best describes consumer surplus in the supply and demand model?
a. Consumer surplus is the area in the supply and demand model that is above the market price and above the demand curve. b. Consumer surplus is the area in the supply and demand model that is below the market price and below the demand curve. c. Consumer surplus is the area in the supply and demand model that is above the market price and below the demand curve. d. Consumer surplus is the area in the supply and demand model that is below the market price and above the demand curve.
A profit-maximizing entrepreneur will produce and sell an additional unit of output as long as
a. it lowers the firm's unit costs. b. it lowers the firm's marginal cost. c. it adds more to revenue than it adds to cost. d. there is additional plant capacity to produce.
A monopolist faces a
a. horizontal demand curve. b. vertical demand curve. c. downward-sloping demand curve. d. U-shaped demand curve.
Which of the following is NOT a form of nonprice competition?
a) location b) physical characteristics c) advertising d) discounts