Each step up the education ladder improves the incomes of white males but not of black males. Indicate whether the statement is true or false ANSWER F
Date: September 9th, 2020
Moral hazard may arise in lending when small firms borrow funds from banks for one project (e.g., buy new machinery for a factory) and actually use the funds in other ways (e.g., buy the manager a new corporate jet). What is the source of the asymmetric information problem in this case? A) The bank has […]
Date: September 9th, 2020
Playing the game in Scenario 13.12 sequentially would A) not change the equilibrium. B) change the equilibrium to (R1,C1 ). C) change the equilibrium to (R2,C1 ) if R moved first. D) change the equilibrium to (R2,C1 ) if C moved first. E) change the equilibrium to (R2,C2 ). ANSWER A
Date: September 9th, 2020
Which is the best example of a nondiversifiable risk for Stalwart Shoes? A) A project to open a new store in Texas B) A project to open a new factory in Texas C) A project to move into the sock market D) The state of the economy in Texas E) The state of the U.S. […]
Date: September 9th, 2020
The United States is the only country that currently meets the Millennium Goal standard of providing 0.7% of GDP to foreign aid. Indicate whether the statement is true or false ANSWER F
Date: September 9th, 2020
Which of the following is NOT an example of moral hazard in business? A) A bank buys risky mortgage securities because they believe the government will provide a bail-out if the investment performs badly. B) A firm uses venture capital to speculate in the commodity futures market. C) A firm does not hire adequate security […]
Date: September 9th, 2020
More education guarantees a higher income and escaping poverty. Indicate whether the statement is true or false ANSWER F
Date: September 9th, 2020
A perfectly competitive hardware manufacturer has total revenue of $85 million, total variable costs of $45 million, and fixed costs of $10 million. What is the firm’s producer surplus? A) $85 million B) $70 million C) $40 million D) $30 million ANSWER C
Date: September 9th, 2020
Bancroft Pharmaceuticals has a patent on a new medication used to treat high blood pressure, so it is the monopoly seller of this new drug product. The marginal cost of producing one dose of the drug is $10, and the elasticity of demand for the product is -3. What is the profit maximizing monopoly price […]
Date: September 9th, 2020
Suppose you invest $100,000 in a new machine today, and you earn a $150,000 return in one year. What is the internal rate of return on this investment? A) 10 percent B) 25 percent C) 50 percent D) 100 percent ANSWER C
Date: September 9th, 2020
