If a corporation fails, the last recipients of funds that may remain are
A) preferred stockholders.
B) common stockholders.
C) bond holders.
D) government tax collectors.
B
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Expected utility theory predicts that individuals will fully insure in actuarily fair markets so long as their tastes are state-independent. How might adverse selection result in some individuals under-insuring?
What will be an ideal response?
When the Federal Reserve buys new government bonds, it is borrowing from the government
a. True b. False
If the consumer is willing to give up 3 units of food (vertical axis) in exchange for one unit of shelter (horizontal axis) and food is priced at 10 and shelter at 20, then the consumer is purchasing
A. just the right amount of each good for utility maximization. B. too much food for utility maximization. C. less than the budget would allow. D. too much shelter for utility maximization.
Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfare is $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1,400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfare is $450. What is the opportunity cost of using the coupon for the Miami trip?
A. $550 B. $450 C. $100 D. $500