Banks are better at solving the stockholder-lender conflict than rating agencies when they
A) are allowed to hold a substantial ownership stake in the borrowing firm.
B) steer clear of holding any ownership stake in the borrowing firm.
C) operate in markets-oriented financial systems.
D) issue individually-approved loans rather than lines of credit.
A
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Many people believe that the incentive arguments for redistribution are irrelevant, and that the wealthy simply have a __________.
a. lot more money than they can ever use b. moral obligation to provide for the less fortunate c. birth right that made them wealthy through no efforts of their own
Refer to Figure 4-1. If the market price is $3.00, what is the consumer surplus on the second ice cream cone?
A) $0 B) $0.50 C) $3.00 D) $5.50
Widgets R Us, which is a price-taking firm, is currently producing 250 units of output. The market price is $3 per unit, the marginal cost of the 250th unit is $2.75, average total cost is $3.50 per unit, and average variable cost is $2.50 per unit
What advice should you give Widgets R Us? A) Increase output to reduce losses. B) Continue to produce 250 units in the short run. C) Shut down to minimize losses. D) Decrease output to 200 units.
The real cost of a decision is the opportunity cost measured in the commodities forgone
a. True b. False Indicate whether the statement is true or false