If there were an increase in the number of bank failures, we should expect the amount of excess reserves in the banking system to:
A. increase.
B. decrease since failing banks lost theirs.
C. decrease.
D. not change.
Answer: A
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Refer to Figure 7.1. The benevolent social planner would want the outcome represented in the ________ box
A) upper left B) upper right C) lower left D) either A or C
Which of the following statements is true of free riding?
A) Free riding is easy to detect and punish. B) Free riding reduces with social pressure. C) Free riding is not affected by incentives. D) Free riding does not impose a cost on society.
The existence of economies of scale is one reason oligopolies exist because
A) a firm is able to increase price leading to increased profits. B) the marginal cost decreases as output increases. C) of strategic dependence. D) as output increases average total cost decreases leading to large-scale firms.
The profit-maximizing level of output for any firm in a perfectly competitive market is to produce where:
A. MC = MR. B. MC > MR. C. MC < MR. D. MR = P*.