Over the past several years, the federal government has rescued a few financially distressed banks and other large private companies, and the key reasons for these actions is to stabilize financial markets and to prevent additional business failures that may arise from the original problem. However, critics of these interventions argue that these actions generate […]
Refer to Scenario 10.7. How many ink pads will be produced to maximize profit? A) 50 B) 250 C) 500 D) 800 E) none of the above ANSWER B
There is anecdotal evidence to suggest that global inequalities are often rooted in inequities. Indicate whether the statement is true or false ANSWER T
The situation pictured in Figure 6.3 A) is one of increasing marginal returns to labor. B) is one of increasing marginal returns to capital. C) is not consistent with diminishing marginal product of labor or capital. D) shows constant returns to scale. E) shows diminishing marginal products of labor and capital. ANSWER E
Refer to Scenario 10.7. Suppose that the firm chooses to produce 200 ink pads. At this level of output the demand for ink pads is A) inelastic. B) unit elastic. C) elastic. D) unit elastic. ANSWER C
Even if, on average, better-educated individuals can earn more money, all persons with more schooling will not necessarily have higher incomes. Indicate whether the statement is true or false ANSWER T
Which kind of risk affects the opportunity cost of capital? A) Nondiversifiable risk B) Diversifiable risk C) Both nondiversifiable and diversifiable risk D) The risk inherent in “riskless” assets such as U.S. Treasury bills E) The risk inherent in “riskless” portfolios such as broad stock market holdings ANSWER A
The United Nations set a “Millennium Goal” to cut the incidence of global poverty in half between 2000 and 2015. Indicate whether the statement is true or false ANSWER T
Traditionally, the federal government provides disaster relief funds to flood victims so that they can rebuild their homes after a major flood. However, the government has recently denied requests to rebuild some homes that were situated in flood-prone areas. This action represents an attempt to ________ the moral hazard problem associated with building private homes […]
You manage a new product development team for an electronics manufacturer, and your firm’s policy is that all new projects must pay for themselves in the first five years. Your team has projected that the first year of the project requires an initial investment of $2 million with no revenue, the second year loss is […]
