Acme Widget tells investors it wants to build a new widget factory and sell investors $10,000,000 in bonds to finance it
Once they have raised the $10,000,000 the owners of Acme Widget use the funds to finance a trip to Atlantic City to try out a new scheme they have devised to win at blackjack. This is an example of A) the adverse selection problem in financial markets.
B) the moral hazard problem in financial markets.
C) the difficulty lenders have in distinguishing good from lemon firms.
D) the problems with using rational expectations in financial markets.
B
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How does the presence of negative externalities affect the calculation of GDP?
What will be an ideal response?
Refer to the table above. Assume that the market for notebooks is in equilibrium. Which of the following is likely to happen if a few sellers of notebooks decide to exit the market, everything else remaining unchanged?
A) Both the equilibrium price and quantity of notebooks remain unchanged. B) Both the equilibrium price and quantity of notebooks decrease. C) The equilibrium price of notebooks increases, but the equilibrium quantity decreases. D) The equilibrium price of notebooks decreases, but the equilibrium quantity increases.
Patent trolls ________
A) are paid by innovative firms to the federal government B) buy up patents then attempt to extract large payments from firms using similar technology C) develop new machines and machine processes in small-scale firms, rather than large corporations D) can evolve into natural monopolies
Demand is inelastic if
a. the percentage change in price is greater than the percentage change in quantity demanded b. the percentage change in price is less than the percentage change in quantity demanded c. the percentage change in price is equal to the percentage change in quantity demanded d. the value of price elasticity is equal to -1 e. the value of price elasticity is less than -1 (e.g., -3)