Firms that extend credit to borrowers using funds from raised from savers are called:
A. financial intermediaries.
B. stock brokers.
C. bond dealers.
D. central banks.
Answer: A
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Suppose a monopoly has constant marginal costs of $40 per unit. Demand for the monopolist’s product is Q = 100 - 0.5P.
i. What are the profit maximizing price and quantity for this monopoly? Explain how you arrived at your answer. ii. How many units of the product would the competitive market supply? What would the equilibrium price be? Explain how you arrived at your answer. iii. Calculate how much consumer surplus would be lost if this market started off as perfectly competitive but then became monopolistic. iv. Calculate how much producer surplus would be gained if this market started off as perfectly competitive but then became monopolistic. v. Briefly explain how your answers to parts iii and iv relate to the deadweight loss created by the monopoly.
Consider a market for used cars. Suppose there are only two kinds of cars: lemons and good cars. A lemon is worth $1,500 both to its current owner and to anyone who buys it. A good car is worth $6,000 to its current and potential owners
Buyers can't tell whether a car is a lemon until after they have bought the car. What do economists call the problem that buyers of used cars face? What kind of cars (lemons, good cars, or both) are traded? Explain and substantiate your answer.
In the dominant firm model as evidenced by the production of iPods by Apple, the entrance of the competitive fringe firms has what effect on the dominant firm?
A) Its price is lower, but it produces more output. B) Its price is lower, and it produces less output. C) Its price is the same, but it produces less output. D) Its price is higher, but it produces more output.
Alfred Kahn's plan for airline deregulation emphasized
a. marginal cost pricing of tickets. b. average cost pricing of tickets. c. federal subsidies for certain airlines. d. increased federal taxes on airline profits.