Recall the Application about the decrease in price of illegal drugs in the United States to answer the following question(s).Recall the Application. The decrease in price of illegal drugs could be caused by either a(n) ________ in demand or a(n) ________ in supply of the drugs.
A. increase; increase
B. increase; decrease
C. decrease; increase
D. decrease; decrease
Answer: C
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Assume we have a simplified banking system in balance-sheet equilibrium. Also assume that all banks are subject to a uniform 10 percent reserve requirement and demand deposits are the only form of money. A commercial bank receiving a new demand deposit of $100 would be able to extend new loans in the amount of
A. $10.
B. $90.
C. $100.
D. $1,000.
Normal rate of return is
A) accounting profit. B) an explicit cost. C) economic profit. D) the amount that must be paid to obtain investment in a business.
The main reason for diversification for an investor is to:
A. lower transaction costs. B. take advantage of the fact that returns on assets are not perfectly correlated. C. take advantage of the fact that returns of assets are perfectly positively correlated. D. gain from the greater returns that come from greater risk.
If firms in a competitive industry independently operate to maximize profits, the ________ are eventually equalized across the firms
A) total costs B) marginal costs C) profits D) revenues