The rivalry versus nonrivalry issue is
A. relevant to the issue of market failure.
B. not relevant to the issue of market failure.
C. relevant to the free-rider problem.
D. a and c
E. b and c
Answer: B
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Consider the market for credit. When the demand for credit increases while the supply of credit remains unchanged,
A) the interest rate will decrease and the amount of credit provided in the market will increase. B) the interest rate will increase and the amount of credit provided in the market will increase. C) the interest rate will decrease and the amount of credit provided in the market will decrease. D) the interest rate will increase and the amount of credit provided in the market will decrease.
Life insurance companies, because of the __________-term nature of their liabilities, prefer to hold __________-term assets
A) long; long B) long; short C) short; long D) short; short
The difference between the interest rate on loans to households and firms and the rate on completely safe assets is known as ________
A) the discount rate B) the FICO score C) the credit spread D) the prime rate
If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour then
A) Irene has the absolute advantage in the production of chairs. B) Irene has the comparative advantage in the production of tables. C) Greg has the absolute advantage in the production of chairs. D) Greg has the comparative advantage in the production of chairs.