An entrepreneur is considering how many limousines to purchase when he starts up a limousine service. Below are his estimates of the number of limousine rentals the service will make during a year, depending on the number of limousines available.Number oflimousinesTotal numberof rentals13502650390041,10051,250After paying all non-interest expenses, the owner expects to net $10 per rental. Each limousine costs $50,000. How many limousines should he purchase if the real interest rate is 6.5%?
A. 2.
B. 4.
C. 3.
D. 1.
Answer: D
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A shareholder in a corporation
A) may not sell his or her share of ownership in the business without the business dissolving. B) can earn interest, but not dividends, from the profits of the business. C) is a part owner of the business. D) is personally liable for the debts of the corporation.
Under the long-run equilibrium, for perfectly competitive markets without any government intervention,:
a. producer surplus is greater than consumer surplus. b. consumer surplus is greater than producer surplus. c. the sum of consumer and producer surplus is maximized. d. consumer surplus is maximized. e. producer surplus is maximized.
If a number of people suddenly deposit into their checking accounts a great deal of cash previously kept in their pockets or at home, other things constant, their actions will
a. create excess reserves and place banks in a position to extend additional loans, which will reduce the money supply. b. create excess reserves and place banks in a position to extend additional loans, which will expand the money supply. c. lead to higher interest rates. d. force the Fed to reduce its discount rate.
If the Fed purchases $100,000 of government bonds, and the reserve requirement is 20 percent, the maximum increase in the money supply is $ 500,000.
Answer the following statement true (T) or false (F)