Which of the following are scarce? Select one:
a. time for recreation
b. clean air
c. information
d. all of the above
d. all of the above
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When local governments ignore all other considerations and award cable TV franchises to the firms that offer the highest money bids, they
A) discriminate against the poor. B) encourage corruption. C) introduce delay into the system but increase its efficiency. D) reduce the likelihood of illegal bribes. E) increase the likelihood the winning firm will be incompetent.
Two bonds have the same term to maturity. The first was issued by a state government and the probability of default is believed to be low. The other was issued by a corporation and the probability of default is believed to be high. Which of the following is correct?
a. Because they have the same term to maturity the interest rates should be the same. b. Because of the differences in tax treatment and credit risk, the state bond should have the higher interest rate. c. Because of the differences in tax treatment and credit risk, the corporate bond should have the higher interest rate. d. It is not possible to say if one bond has a higher interest rate than the other.