Elasticity along a downward sloping linear demand curve
A) is constant and equal to the slope of the curve.
B) is constant and equal to the slope times the ratio of price to quantity.
C) changes along the curve.
D) does not vary with price unless the good is expensive.
C
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If the value of a cable TV franchise is uncertain, too much may be bid for the franchise. This is an example of
a. moral hazard b. an authority relation c. the winner's curse d. the principal-agent problem e. adverse selection
An important routine function of the Federal Reserve Bank is to:
A. supervise the liquidation of the assets of bankrupt state banks. B. help large commercial banks develop correspondent relationships with smaller commercial banks. C. advise commercial banks as to the most profitable ways of reinvesting profits. D. provide facilities by which commercial banks and thrift institutions may collect checks.