Refer to the following graph.
This set of cost curves is:
A. wrong because the average total cost and marginal cost curves are switched.
B. correct.
C. wrong because the average total cost and average variable cost curves are reversed.
D. wrong because the AFC should always be downward-sloping.
Answer: D
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Why is adverse selection more likely in financial markets when interest rates rise?
A) The remaining borrowers are more likely to be risky. B) Higher interest rates are likely to hurt the economy. C) If firms have to pay higher interest rates, they may choose to use the funds differently than they first intended. D) Banks eliminate risky borrowers by raising interest rates.
Which of the following would be considered an implicit cost?
a. Health insurance of employees paid for by the firm b. The water bill of the firm c. The salaries paid to the managers of the firm d. Foregone rent on assets owned by the firm