Banks
A) provide a channel for linking those who want to save with those who want to invest.
B) produce nothing of value and are therefore a drain on society's resources.
C) are the only financial institutions allowed to give loans.
D) hold very little of the average American's wealth.
A
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If good 1 is essential for one person but not for the other, the first person will end up with all of good 1 in a competitive equilibrium within the Edgeworth Box.
Answer the following statement true (T) or false (F)
An example of an "investment" financial intermediary is
A) an insurance company. B) a private pension fund. C) a credit union. D) a mutual fund.
Price discrimination is more likely in the case of services than in the case of goods because
A) producers of goods usually do not face downward sloping demand curves. B) it is easier to distinguish customers with different elasticities of demand with respect to services than with goods. C) elasticities of demand vary more with services than with goods. D) it is more difficult to resell services.
Vertical contracts between manufacturers and retailers often aim to
a. Incentivize the retailers to undertake costly activities, which they otherwise may not realize the full benefits of on their own b. Reward the manufacturer for undertaking the risk inherent in introducing a new product c. Serve as a "signal" of the retailer's belief of the likely success of his product d. All of the above