Maximizing the present value of all future profits is the same as maximizing current profits if the growth rate in profits is:
A. less than the interest rate.
B. greater than the interest rate.
C. not constant over time.
D. equal to the interest rate.
Answer: A
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Suppose a bank has $200 million in checking account deposits with no excess reserves and the required reserve ratio is 15%. If the Fed reduces the required reserve ratio to 10%, the bank will now have excess reserves of
A) $0. B) $10 million. C) $20 million. D) $30 million.
The use of data in economic models is important because
A) the model's predictive value rests on supportive evidence from real-world data. B) the models are always complex in nature. C) models must analyze every possible angle of the problem. D) social problems analyzed by economists require long streams of data.
Consider monopoly, monopolistic competition, and perfect competition. In which of these three market structures does a profit-maximizing firm charge a price that exceeds marginal cost?
a. monopoly only b. monopoly and monopolistic competition only c. monopoly, monopolistic competition, and perfect competition d. The answer cannot be determined without knowing whether the market is in the long run or short run.
Employer-provided private health insurance:
A. is unique to the United States and not typically found in other countries. B. is the most common form of health care provision in industrialized countries. C. substantially reduces the cost of health care provision relative to national health insurance schemes. D. provides a small percentage of health care spending in the United States.