Althea is a student in your class. Althea wears a perfume called Essence of Efficiency. Bob really likes the scent of this perfume, and is disappointed on days when Althea doesn't wear it. Cathy is mildly allergic to this perfume. Her eyes water and her nose becomes runny when Althea comes to class wearing this perfume. Cathy is fine otherwise. This is a story about
a. too much perfume being produced
b. too little perfume being produced
c. an incomplete market
d. inadequate allocation of responsibility
e. market failure
E
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What is the relationship between price, marginal revenue, and marginal cost when a single-price monopoly is maximizing profit?
What will be an ideal response?
An "originate-to-hold" strategy means:
a. Mortgage originators make loans with the intention of having investors purchase and hold them. b. Mortgage originators make loans with the intention of keeping these assets on their balance sheets. c.Innovative mortgage loans are more likely to hold investors' interests than standard, run-of-the-mill mortgage loans. d. Originating loans is a lengthy process that requires originators to hold mortgages for longer periods than they want. Therefore, a strategy is needed for this holding period.
Suppose that the price of doughnuts decreases. Given that doughnut holes are a by-product of producing doughnuts, one would expect:
A. the supply of doughnuts to increase. B. the supply of doughnut holes to increase. C. the supply of doughnut holes to decrease. D. the supply of doughnuts to decrease.
The steeper is the IS curve,
A) the more effective is monetary policy. B) the less effective is monetary policy. C) the effectiveness of monetary policy does not change. D) a given change in the money supply will have a greater effect on output.