A 10 percent increase in the cost of restaurant meals, which are a luxury, will most likely
A. increase the purchase of meals by 10 percent.
B. increase the purchase of meals by less than 10 percent.
C. decrease the purchase of meals by more than 10 percent.
D. decrease the purchase of meals by less than 10 percent.
Answer: C
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Refer to the scenario above. What is Alice's optimal bidding price?
A) $25,000 B) $30,000 C) $24,000 D) $36,000
Market risk is:
a. The chance that financial assets cannot be sold quickly and without substantial loss of value. b. The chance of a change in the market value of a security due to changes in macroeconomic variables, such as interest rates or exchange rates. c. The risk that credit cannot be expanded by the banking system due to a central bank regulation. d. The chance that borrowers will be unable or unwilling to repay their debts.
Barry was a mortgage originator from 2002 to 2007. He often had clients who had limited financial assets, but he nevertheless encouraged them to take out large mortgages he felt they probably could not afford. Briefly explain why Barry would have been motivated to make such financial transactions.
What will be an ideal response?
A firm produces and sells two goods, A and B. Good A is known to have many close substitutes; good B makes up a significant portion of most families' budgets. A price increase for each good would most likely cause total revenues from good A to
A. decrease and total revenues from good B to increase. B. increase and total revenues from good B to increase. C. decrease and total revenues from good B to decrease. D. increase and total revenues from good B to decrease.