Fractional reserve banking occurs when:
a. a bank has reserves that exceed its deposits
b. a bank has reserves that are equal to its deposits.
c. a bank has reserves that are less than its deposits.
d. some depositors lose their deposits through poor bank management.
e. some lenders fail to repay their loans.
c
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A consumer values a car at $525,00 . and a producer values the same car at $485,000 . If sales tax is 8% and is levied on the seller, then the sellers bottom line price is
a. $527,000 b. $523,800 c. $525,000 d. $500,000
Authors are allowed to be monopolists in the sale of their books in order to
a. encourage authors to write more and better books. b. correct for the negative externalities that the Internet and television impose. c. satisfy literary advocacy groups that exercise their lobbying power. d. promote a society in which people think for themselves and learn from whichever books they please.
In the market for used cars, the lemons model predicts that:
A. sellers are less likely to sell low-quality cars than high-quality cars. B. sellers are more likely to sell low-quality cars than high-quality cars. C. sellers are more likely to understate the condition of their cars. D. buyers are more likely to overstate their reservation price.
The long-run equilibrium of monopolistic competition is characterized by
A. P = MC > ATC. B. P = MR = MC. C. P = ATC > MC. D. P = MC = ATC.