Which of the following has been a problem faced by the FDIC in its provision of federal deposit insurance?
A. a relatively low number of bank failures each year, which has reduced the need for deposit insurance
B. adverse selection arising from the tendency for banks to take on more risk after they receive deposit insurance
C. moral hazard arising from the tendency for the highest-risk banks to be those most interested in obtaining deposit insurance in the first place
D. moral hazard arising from the tendency for banks to take on more risk after they receive deposit insurance
Answer: D
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Black markets can generally be eliminated when price ceilings are enacted.
Answer the following statement true (T) or false (F)
For a previously-legal good, criminalization will cause
A. demand to become less elastic. B. supply to increase. C. supply to become more elastic. D. price to rise, unambiguously.
Economies of scope involve
A. economies realized by producing several goods simultaneously. B. economies in marketing and transportation of many products. C. economies from being larger and have lower cost per unit. D. all of the above.
Assume that an economy producing two products, skateboards and in?line skates, is initially in equilibrium, and that skateboards and in?line skates are substitutes. If consumer preferences shift away from skateboards and toward in?line skates, which of the following will not occur?
A. Additional capital will begin to flow into skateboard production in the long run. B. Additional capital will begin to flow into in?line skates production in the long run. C. In the short run, firms producing skateboards will incur losses. D. In the short run, firms producing in?line skates will earn a profit.