What is meant by the "paradox of leverage?"
What will be an ideal response?
The paradox of leverage occurs when all financial institutions try to deleverage at once. This will prove counterproductive as falling asset prices will mean more losses, diminishing their net worth still more, raising leverage and making the assets they hold seem riskier, compelling further sales, and so on.
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What is the "tax wedge"?
What will be an ideal response?
A monopolist is producing at an output level at which ATC = $5, P = $6, MC = $4, and MR = $3. We can conclude that
A) economic profit could be increased by producing more. B) economic profit could be increased by producing less. C) economic profit cannot be increased. D) the firm is earning $10 in economic profits.
Given that the firm offers both the products, what is the maximum price it can charge for the high-end wok to have the chefs only buy the high-end wok?
a. $70 b. $80 c. $90 d. $100
In the above figure, the optimal level of pollution cleanup is
A) Q1.
B) Q2.
C) Q3.
D) Q4.