(Consider This) Subsidies for mohair production illustrate:
A. why special-interest effects are often characterized by concentrated benefits and diffuse
costs.
B. why special-interest effects are often characterized by concentrated costs and diffuse
benefits.
C. that larger groups carry greater political weight than smaller groups.
D. the moral hazard problem.
Answer: A
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Refer to the scenario above. What is likely to be the impact on Firm B's sales if Firm A decides to sponsor the event while Firm B decides not to sponsor the event?
A) A 0% increase in sales B) A 7% increase in sales C) A 5% increase in sales D) A 10% increase in sales
The price of a coupon bond and the yield to maturity are ________ related; that is, as the yield to maturity ________, the price of the bond ________
A) positively; rises; rises B) negatively; falls; falls C) positively; rises; falls D) negatively; rises; falls
If in some range of production, average cost is falling, the firm is experiencing
A. increasing returns to scale. B. decreasing returns to scale. C. constant returns to scale. D. increasing costs per unit of output.
Which of the following examples reflects the liquidity trap?
a. After a bank receives additional reserves, it collects interest on those funds rather than loaning them. b. After receiving additional reserves, a bank invests large sums in a bull market. c. After a bank receives additional reserves, the number of loans it makes increases significantly. d. After receiving additional reserves, a bank uses half of them for investments.