Which of the following is not a responsibility of the Federal Reserve?
a. Controlling the money supply
b. Printing paper currency
c. Supervising banks
d. Acting as a bank for banks (e.g., lender of last resort)
e. Clearing checks
B
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In order to ensure allocative efficiency on the part of a natural monopoly, regulators would set price equal to marginal cost
a. True b. False
A pervasive tradeoff in financial markets relates risk to expected returns. Which of the following statements reflects this relationship?
a. The higher the risk of an asset, the lower the expected return on the asset. b. There is usually no relationship between risk and return. c. The higher the risk of an asset, the higher the expected return on the asset. d. The return on an asset is normally positively related to the risk of comparable assets. e. The return on a risky asset cannot be compared with the return on a risk free asset.
A purely competitive firm is a price maker, but a monopolist is a price taker.
Answer the following statement true (T) or false (F)
View Your World, a high-end window manufacturer, directly pays all of the transaction costs. The managers of View Your World are considering the profit-maximizing location for their plant. If locating the plant closer to its customers saves $15,000 in transportation costs of its windows to its customers, but causes an additional $11,500 in input transportation costs, View Your World ________
locate its plant closer to its customers as the marginal benefit is ________ than the marginal cost. A) should not; more B) should not; less C) should; less D) should; greate