Korie wants to start her own business making custom furniture. She can purchase a factory that costs $400,000 . Korie currently has $500,000 in the bank earning 3 percent interest per year. If Korie purchases the factory with her own money, what is the annual implicit opportunity cost of purchasing the factory?

If the price of carrots is below the equilibrium price, the

A) quantity supplied of carrots exceeds the quantity demanded, and a shortage exists. B) quantity demanded of carrots exceeds the quantity supplied, and a shortage exists. C) quantity demanded of carrots exceeds the quantity supplied, and a surplus exists. D) quantity supplied of carrots equals the quantity demanded. E) quantity supplied of carrots exceeds the quantity demanded, and a surplus exists.

Which of the following is an example of how incentive structures contributed to the collapse of investment banks?

a. The bonus structures of most executives were tied to short-term profitability. b. The rating agencies acted independently in assigning ratings to mortgage-backed securities and had no incentive to understate the risks. c. Mortgage-backed securities were closely scrutinized in order to minimize risk and obtain higher ratings. d. Despite SEC regulations, investment banks kept leverage ratios low in order to increase profits.