The problem of moral hazard that resulted from federal deposit insurance can be attributed to all of the following except
A) depositors have little incentive to monitor their bank.
B) deposit premiums until recently did not depend on risk.
C) risk aversion by managers of banks plus bank examination.
D) the incentive of bank stockholders to increase risk because they share disproportionately in success but the FDIC shares disproportionately in failure.
C
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Bob and Bill can make 16 toys each if they devote 8 working hours in a day. Further, Bob can repair 4 cars and Bill can repair 2 cars, if they devote 8 working hours in a day. When these two individuals engage in trade, it would be advantageous for both if:
a. Bob specializes in the production of toys and Bill specializes in car repairing. b. Bob specializes in car repairing and Bill specializes in the production of toys. c. they specialize only in car repairing. d. they specialize only in the production of toys. e. they distribute their working hours evenly between the production of two goods.
In a competitive market illustrated by the diagram below, a price ceiling of $10 per unit will result in:
A. A shortage of 200 units
B. A surplus of 200 units
C. A surplus of 250 units
D. A shortage of 250 units