Consider the cash/spot and futures corn market transactions above. What are gross gains disregarding broker commissions and storage costs?
A. 10 cents per bushel
B. 20 cents per bushel
C. 30 cents per bushel
D. Loss of 20 cents per bushel
Ans: A. 10 cents per bushel
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If a technological advance takes place in the computer industry, then the equilibrium price of a computer will ________ and the equilibrium quantity will ________
A) fall; increase B) fall; decrease C) rise; increase D) rise; decrease
The greater is the absolute price elasticity of demand, the
A) larger is the responsiveness of quantity demanded to the price change. B) smaller is the responsiveness to a price change. C) larger is the income of the buyer. D) higher is the change in demand to an income change.
Southwest Airlines wants to raise $20 million to finance the renovation of their corporate offices, and the company wishes to raise the funds through direct finance. Which of the following methods could it use?
A) It could issue $20 million in stocks. B) It could sell $20 million in bonds. C) It could borrow $20 million from a bank. D) It could choose either A or B.
The government imposes a price ceiling on sugar that is above the market price. You are asked to suggest a rationing scheme that will minimize the misallocation of resources. You suggest
A. using rationing coupons that can be resold. B. using rationing on a first-come, first-served basis. C. using rationing coupons that cannot be resold. D. that no rationing system will be necessary.