Which of the following is a financial contract in which a firm agrees to repay the amount borrowed plus interest?
a. Corporate bond
b. Certificate of deposit
c. Municipal bond
d. Stock
a. Corporate bond
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Would a profit-maximizing firm sell where demand is inelastic?
a. No, this would not follow the rule of MC = MR. b. No, the firm could not profitably raise price. c. Yes, the firm could profitably lower price to attract sales. d. Yes, in this case there are few substitutes for the good.
The change in the cost of living over time is referred to as:
A. inflation. B. substitution bias. C. a fixed-weight price index. D. real income.
Regulators often adopt policies that benefit
A. the firms regulated rather than consumers. B. consumers and injure producers. C. no one. D. only the government.
Which of the following is not related to adverse selection in insurance markets?
a. An insurance company has no way of distinguishing among applicants b. An insurance company must charge a higher price to applicants who are good health risks c. The price of insurance is attractive to poor health risks, but not to good ones d. The insured group becomes less healthy on average e. Because of the relative unhealthiness of the insured group, rates must rise