If the rental rate increases, we know for sure that the firm will produce less and will (in the long run) use less capital.

Answer the following statement true (T) or false (F)


True

Rationale: See Graph 13.8 in the text.

Economics

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If firms successfully gather information about consumers before offering them insurance, and if this leads to a separating equilibrium, efficiency is restored.

Answer the following statement true (T) or false (F)

Economics

How can specializing in lending help to reduce the adverse selection problem in lending?

What will be an ideal response?

Economics

Schumpeter's hypothesis states that

a. monopolists are always trying to raise prices b. competition does not always generate the lowest prices c. when government fosters competition, prices fall d. price-takers create the highest prices e. efficiency is highest under conditions of perfect competition

Economics

If the income elasticity for a particular good is negative, then:

A. as income increases, consumers will tend to purchase more of the good. B. as income increases, consumers will tend to purchase less of the good. C. the good is a normal good. D. the good is a luxury good.

Economics