When _____ are ______, it will be difficult to reach a private solution
a. transactions costs; high
b. transactions costs; low
c. externalities; visible
d. externalities, invisible
a
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Refer to Figure 12-2. Suppose the firm is currently producing Q2 units. What happens if it expands output to Q3 units?
A) It makes less profit. B) It will be moving toward its profit maximizing output. C) Its profit increases by the size of the vertical distance df. D) It incurs a loss.
A bank's commitment to provide a firm with loans up to pre-specified limit at an interest rate that is tied to a market interest rate is called
A) an adjustable gap loan. B) an adjustable portfolio loan. C) loan commitment. D) pre-credit loan line.
An example of moral hazard is
a. people drive as carefully in icy conditions with antilock brakes as without b. people drive as safely with more airbags as without c. football players avoid 'spearing' with their heads even with safer helmets d. people fail to read the medicine warnings more often when self-medicating versus with a doctor's prescription
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What will be an ideal response?