In the two-period model, the nature of the asymmetric information is that
A) only the bank knows who the bad borrowers are.
B) only borrowers know whether they are bad or not.
C) only borrowers know the value of their collateral.
D) only banks can value the collateral.
B
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The two theoretical extremes of the market structure spectrum are occupied at one end by perfect competition and on the other end by monopoly
a. True b. False Indicate whether the statement is true or false
If the price of a good rises by 10 percent and quantity demanded falls by 20 percent, we can predict that
A. The company's total profit will rise. B. The company's total revenue will remain the same. C. The company's total revenue will increase. D. The company's total revenue will decrease.
An increase in the price of a substitute shifts the demand curve to the _______
a. right b. left c. it does not change the demand curve d. none of the above
A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating:
A. price and average total cost. B. price and average fixed cost. C. marginal revenue and marginal cost. D. price and marginal revenue.