Which of the following is INCORRECT regarding monopoly and profits?
A) The mere existence of a monopoly does not guarantee high profits.
B) Numerous monopolies have gone bankrupt.
C) A monopolist will never experience economic losses.
D) The monopolist reaches profit-maximizing output by trial and error.
Answer: C
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An economic model suggests that an additional year of education increases a student's future wages by 15 percent. Using this model, answer the following questions:
a) Gary completes 8 years of education, and John completes 9 years of education. If Gary earns $20 per hour, how much is John expected to earn? b) John completes 9 years of education, and Kevin completes 12 years of education. Given John's earnings [as calculated in a)], how much is Kevin expected to earn? c) Is there any limitation to such a model? Explain your answer.
Credit risk is the risk that
A) an insufficient number of borrowers will apply for loans or credit. B) interest rates will rise after a loan has been granted. C) interest rates will fall after a loan has been granted. D) borrowers might default on their loans.