Why would acquiring 20,000 acres of land in Florida to build an amusement park be more difficult than acquiring 20,000 acres of land in Florida to grow oranges?
What will be an ideal response?
To grow oranges, almost any land in Florida would suffice, and since this land does not need to be contiguous, that fact can be used as leverage to get landowners to negotiate lower prices for the land. For an amusement park, the 20,000 acres need to be contiguous, so individual landowners have a great deal of power to hold out for a higher price for their individual parcels of land.
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The Coase Theorem does not imply which of the following?
a. Resources will be allocated efficiently in the absence of transactions costs. b. Resources will move to their highest valued use in there are no transactions costs. c. The initial allocation of property rights does not matter to the parties involved. d. The allocation of resources is independent of the assignment of property rights if transactions costs are zero.
Two events A and B in a sample space are considered _____ if the probability that A will happen is the same regardless of whether or not B has happened
a. conditional b. correlated c. independent d. exclusive
The "Money Tower of Babel" mentioned in the text refers to
a. the fact that there is too much money floating on the foreign exchange market b. the fact that countries have their own currencies c. the multiple exchange rates for each currency d. the foreign currencies used to strengthen economies e. too much money servicing international trade creates international inflation
Suppose AT&T issues a five-year bond with a face value of $10,000 that pays an annual coupon payment of $300. What is the interest rate that AT&T is paying on the borrowed funds?
a. 15% b. 3% c. 10% d. 33%