Consider the monopolistic competition, entry, and exit curve. Which of the following would cause both the perceived demand curve and the marginal revenue curve to shift to the right?
a. Gains induce new firms to leave the industry, causing demand from the original firm to fall.
b. Gains induce new firms to leave the industry, causing demand from the original firm to rise.
c. Losses induce firms to leave the industry, causing demand from the original firm to fall.
d. Losses induce firms to leave the industry, causing demand from the original firm to rise.
d. Losses induce firms to leave the industry, causing demand from the original firm to rise.
Losses induce firms to leave the industry, causing demand from the original firm to rise. Exit causes the perceived demand curve for a monopolistically competitive firm to shift to the right and the corresponding marginal revenue curve to shift right, too.
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Nick has two job offers, one as a financial planner and one as an economist for a regional bank. The income that Nick would expect to earn as a financial planner depends how effective he is in getting clients
He estimates that he would receive either $80,000 and a utility of 75, with a probability of .50, or he would earn $30,000 and a utility of 35, with a probability of .50. The economist job would pay $45,000 per year and has a utility of 55. To maximize his expected utility, which job should Nick take? A) Nick is indifferent between the two jobs. B) Nick is better off if he takes the economist job. C) Nick is better off if he takes the job of financial planner. D) Nick should look around for another job.
Everything else held constant, when the federal funds rate is ________ the interest rate paid on reserves, the quantity of reserves demanded rises when the federal funds rate ________
A) above, rises B) above, falls C) below, rises D) below, falls
Analysis of adverse selection indicates that financial intermediaries, especially banks
A) have advantages in overcoming the free-rider problem, helping to explain why indirect finance is a more important source of business finance than is direct finance. B) despite their success in overcoming free-rider problems, nevertheless play a minor role in moving funds to corporations. C) provide better-known and larger corporations a higher percentage of their external funds than they do to newer and smaller corporations which rely to a greater extent on the new issues market for funds. D) must buy securities from corporations to diversify the risk that results from holding non-tradable loans.
Which of the following statements about an increasing-returns-to-scale industry is not true?
a. It will tend to concentrate production in the hands of a very few large firms. b. Firms in the industry face higher costs per unit of production as their level of output increases. c. Opportunity costs may fall with the level of output. d. Proponents of strategic trade policy contend that tariffs can be used to stimulate production by a domestic industry capable of achieving increasing returns to scale. e. The costs of producing a unit of output fall as more output is produced.