Banks lost money during the mortgage default crisis because:
A. of defaulted loans to investors in mortgage-backed securities.
B. they held mortgage-backed securities they had purchased from investment firms.
C. homebuyers defaulted on mortgages held by the banks.
D. of all of these reasons.
D. of all of these reasons.
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Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale. The main reason for the elimination of profits is
A) firms sell their patent rights to other firms so that they can concentrate on finding drugs to treat new illnesses. B) after 20 years patent protection is ended and other firms can produce less-expensive generic versions of the drug. C) the quantity demanded of the drug has increased enough that the demand becomes inelastic and revenue falls. D) after 20 years most people who have taken the drug have passed away or are cured of the illness the drug was intended to treat.
The free-rider problem exists with
a. public transportation b. knowledge. c. online music subscriptions. d. All of the above are correct.
Figure 9.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $40 and the firm is currently producing the profit maximizing output level, the firm's profit is:
A. $7,200. B. $9,000. C. $27,000. D. $36,000.
If, as a result of imperfect information, firms set their wage rates above the market clearing wage rate
A. there will be a shortage of workers. B. unemployment decreases. C. there will be equilibrium in the labor market. D. there will be a surplus of workers.