Diminishing marginal returns implies that firms:
A. require fewer and fewer workers to produce each additional unit of output.
B. require more and more workers to produce each additional unit of output.
C. get decreasing amounts of revenue for each unit of output they produce.
D. get increasing amounts of revenue for each unit of output they produce.
Answer: B
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Mary Green takes a summer course in London, England. She doesn't buy British pounds at the U.S. airport, where the rate is 1 pound = $1.60 . Upon arrival in London, she finds that she can buy pounds for $1.65 each. Which of the following is true?
a. Green would have been better off if she had bought pounds in the United States where U.S. dollars were cheaper. b. Green would have been better off if she had bought pounds in the United States where pounds were less expensive. c. The pounds were more expensive in London because a currency is always most valued in its home country. d. The pounds were more expensive in the United States because they are less available there. e. It doesn't matter where she buys the pounds, since she can't use U.S. money anyway once she's in England.
Explain why a bank with a high debt-to-equity ratio may be more profitable than a bank with a lower ratio but would also have a higher level of risk.
What will be an ideal response?