Explain why most financial instruments are fairly complex, while at the same time quite standardized.
What will be an ideal response?
Most financial instruments are complex in the sense that many possible contingencies are identified and both buyer and seller want to avoid problems that can arise from unforeseen events. To write a complete contract, however, would be very time consuming and expensive. As a result, most financial instruments are standardized because over time many common problems have been identified and worked into the contract, and standardization makes it easier to compare contracts and makes the instruments more liquid.
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A. 50 percent more B. the same amount C. 40 percent more D. less
Once a monopoly has determined how much it produces, it will charge a price that
A) is determined by the intersection of the marginal cost and average total cost curves. B) minimizes marginal cost. C) is determined by its demand curve. D) is independent of the amount produced. E) is equal to its average total cost.
The long-run average cost curve is tangent to the minimum point of every short-run average total cost curve
a. True b. False
Sonia works at a restaurant where tips are pooled and divided equally. Anna works at a different restaurant where she keeps the tips her customers leave for her. Which of the following is true?
a. Both work equally hard because their hourly wage from the employer is low, and they can make up for this with tips. b. Sonia works harder, because she receives the same amount of tips as other workers. c. Anna works harder, because she works at an expensive restaurant. d. Anna works harder, because her tips are her private property. e. Neither of them has an incentive to work hard because tips are a small part of their earnings.