The use of collateral
A) allows banks to charge higher interest rates on loans.
B) makes it more costly for borrowers to take advantage of their asymmetric information.
C) makes it more costly for lenders to take advantage of their asymmetric information.
D) has important tax implications for both borrowers and lenders.
B
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Which of the following activities will generate a negative externality?
a. A beekeeper keeping bees for honey b. Inoculations for communicable diseases c. Research and development activities of a firm d. A chemical factory set up in a residential area e. Improvement in education facilities
One of the most important forms of capital income is
A. rents. B. interest. C. investments. D. dividends.
Refer to the information provided in Figure 33.1 below to answer the question(s) that follow.
Figure 33.1Refer to Figure 33.1. Which of the following statements is true?
A. Trade will benefit both countries because the United States has a comparative advantage in the production of soybeans and Canada has a comparative advantage in the production of alfalfa. B. Trade will benefit neither country because the United States has an absolute advantage in the production of both soybeans and alfalfa, but Canada has a comparative advantage in the production of both soybeans and alfalfa. C. Trade will benefit both countries because the United States has a comparative advantage in the production of alfalfa and Canada has a comparative advantage in the production of soybeans. D. Only Canada can benefit from trade because the United States has an absolute advantage in the production of both soybeans and alfalfa.
A perfectly competitive firm trying to maximize profits in the short run will expand output
A. until total revenue equals total cost. B. until marginal cost equals average variable cost. C. until marginal cost begins to rise. D. as long as marginal revenue is greater than marginal cost.