Suppose a new contracting environment that requires clearing fewer legal hurdles is considered. This new contract will result in:
A. an increase in the marginal cost and a shorter optimal contract.
B. a decrease in the marginal cost and a shorter optimal contract.
C. a decrease in the marginal cost and a longer optimal contract.
D. an increase in the marginal cost and a longer optimal contract.
Answer: C
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In the mid-1980s, the salaries of accounting professors with Ph.D.s increased dramatically. This resulted in an increase in enrollments in Ph.D. accounting programs
Since a Ph.D. degree in accounting may take at least four years to complete, the short-run elasticity of supply of accounting professors is A) greater than the long-run-elasticity of supply. B) less than the long-run elasticity of supply. C) equal to the long-run elasticity of supply. D) equal to the short-run elasticity of demand.
If the quantity demanded increases by 20 percent in response to a 10 percent decrease in price, demand is classified as
a. unstable. b. relatively inelastic. c. relatively elastic. d. of unitary elasticity.
The government uses ______to limit banks’ issuance of loans and make sure they keep a portion of their deposits on hand.
a. deposit insurance b. reserve requirements c. loan size limits d. capital requirements
The "most favored nation principle" means:
a. that member countries can enter into exclusive favorable agreements with some countries. b. that member countries are barred from forming agreements outside their geographic vicinity. c. that member countries must apply the same low tariffs to all WTO member countries. d. that member countries must apply differential tariffs on imports from non-WTO countries.