The presence of transactions costs and information costs
A) lowers the cost of funds to borrowers.
B) raises the expected return to lenders.
C) lowers the expected return to lenders.
D) increases the efficiency of the financial system.
C
You might also like to view...
In the above figure, at any price between $8 per unit to $12 per unit, how many units will a profit-maximizing perfectly competitive firm produce?
A) None, because the producer will never choose to operate at a loss. B) Less than 20 because this will reduce marginal cost. C) Between 20 and 30, because variable costs are covered so the firm's losses will be minimized by producing rather than shutting down. D) More than 30, because variable costs are covered so that the producer can earn economic profits.
Suppose a plaintiff hires a lawyer to represent her in a court case. To which of the following contracts would a highly risk-averse plaintiff agree?
A) The lawyer is paid by the hour. B) The lawyer receives a share of the settlement. C) The lawyer receives a fixed fee. D) The lawyer pays the client a fee for the right to the entire settlement.