A key finding of the economic analysis of financial structure is that
A) the existence of the free-rider problem for traded securities helps to explain why banks play a predominant role in financing the activities of businesses.
B) while free-rider problems limit the extent to which securities markets finance some business activities, nevertheless the majority of funds going to businesses are channeled through securities markets.
C) given the great extent to which securities markets are regulated, free-rider problems are not of significant economic consequence in these markets.
D) economists do not have a very good explanation for why securities markets are so heavily regulated.
A
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When economists speak of normal goods they mean goods for which
A) the demand curve slopes downward. B) marginal utility is positive. C) marginal utility decreases as consumption increases. D) demand decreases when incomes fall.
When the isocost line is tangent to the isoquant, then
A) MRTS = -w/r. B) the firm is producing that level of output at minimum cost. C) the last dollar spent on capital yields as much extra output as the last dollar spent on labor. D) All of the above.