Due to the existence of the FDIC, banks
A) have not changed their behavior even with the existence of insurance.
B) are no longer concerned about net worth.
C) become more cautious in making loans.
D) may make riskier loans knowing that their depositors are insured.
D
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If a firm had a fixed proportions technology, then the pollution produced by this firm
A) cannot be reduced. B) can be reduced only by lowering the level of output (holding technology constant). C) can be reduced by changing how the output is produced within the bounds of the existing technology. D) can be reduced only by increasing the number of firms in the industry. E) can be reduced only by changing the technology.
Refer to the above figures. Which of the panels would be consistent with the situation in which external costs exist?
A) Panel 1 B) Panel 2 C) Panels 1 and 2 D) neither panel