Designers of the Federal Reserve System were concerned that the Fed might form policy favorable to one part of the country or to a particular party. What are some ways that the organization of the Fed reflects such concerns?
1 . The president appoints the Board of Governors, but the Senate must approve them.
2 . The seven members of the Board of Governors serve 14-year terms, so it is unlikely that a single president will have appointed most of them.
3 . The Federal Reserve has 12 regional banks.
4 . The presidents of the regional banks serve as voting members of the FOMC on a rotating basis.
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Martha's Cleaning Services is a perfectly competitive firm that currently cleans 30 offices a week and charges $20 per office, which is the going market price. Martha's marginal cost is $15
What should Martha do to increase her economic profit? Clean more offices? Raise her price? Explain your answer.
What is the principal-agent problem? What are three ways in which firms try to cope with it?
What will be an ideal response?
We see permanent price differentials in land because
a. the demand for land is high b. land has few uses c. location is the inherent quality that often determines its value d. real estate brokers are inefficient e. land is not traded in free markets
Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $6 to $7:
A. total producer surplus would decrease. B. total producer surplus would increase. C. total producer surplus would remain unchanged. D. total producer surplus cannot be determined with the information given.