Let us suppose that you apply for a loan with a bank. You tell the bank that you are going to remodel your kitchen, but after you get the loan you go to Las Vegas to gamble with the money. Your behavior is an example of
A) adverse selection.
B) direct credit allocation.
C) moral hazard.
D) indirect credit allocation.
Answer: C) moral hazard.
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What is the law of diminishing returns? Give an example of what the law of diminishing returns implies
What will be an ideal response?
Which of following statements about bonds is NOT true?
A. Bonds have a variable term. B. The face value of a bond is the amount to be paid at maturity. C. The maturity of a bond refers to the period over which payments are made. D. When interest rates rise, the present discounted value of a bond falls.
Profit maximization occurs at the quantity where marginal cost equals marginal revenue
a. True b. False
Which economic concept is defined as the measure of how responsive consumers are to price change?
a. consumer expectation b. consumer taste c. decreasing marginal utility d. elasticity of demand