Which of the following statements best describes financial instruments?
A. Financial instruments can transfer resources between people but not risk.
B. Financial instruments can transfer risk but not resources between people.
C. All financial instruments are a means of payment.
D. Financial instruments can transfer resources and risk between people.
Answer: D
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If Debbye is willing to pay $50 for a pair of shoes but only has to pay $20 because the shoes are on sale, then her consumer surplus on that pair of shoes is
a. $50 b. $20 c. $70 d. $30 e. $25
Figure 10-4
Figure 10-4 shows the industry's supply and demand curves in panel (1) and the cost curves of a firm in the industry in panel (2). At S3, the firm is
a.
going to shut down.
b.
incurring losses.
c.
earning zero economic profits.
d.
earning economic profit greater than zero.