The presence of deposit insurance in the savings and loan industry
A) created an adverse selection problem because good S&Ls were forced out of the market.
B) solved its own adverse selection problem because it pushed badly managed S&Ls out of the market.
C) contributed to "depositor moral hazard" but did not involve a moral hazard problem with owners.
D) contributed to "moral hazard by owners" but did not involve a moral hazard problem with depositors.
E) contributed to both "depositor moral hazard" and "moral hazard by owners."
E
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At its shutdown point, a perfectly competitive firm earns total revenue that
A) exceeds its total cost. B) generates a normal profit. C) just equals its total variable cost. D) exceeds its total variable cost.
Antitrust laws attempt to
A) support prices at high levels so firms can earn profits. B) establish minimum wages. C) prevent monopolies or collusion. D) enforce fair trade laws.
The Balance of Payments always balances
Indicate whether the statement is true or false
If the players in the figure shown act in their own self-interest, then we know that Adidas will earn:
A. $2 million.
B. $8 million.
C. $6 million.
D. $10 million.