How does a mutual fund lower transactions costs through economies of scale?
What will be an ideal response?
The mutual fund takes the funds of the individuals who have purchased shares and uses them to purchase bonds or stocks. Because the mutual fund will be purchasing large blocks of stocks or bonds they will be able to obtain them at lower transactions costs than the individual purchases of smaller amounts could.
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If government policy makers become more secretive, then the short run aggregate supply curve should get
a. flatter. b. more horizontal. c. vertical. d. steeper.
A welfare loss in a market
a. is the dollar difference between consumer surplus and producer surplus b. is measured as the area above the market price and to the left of the market quantity c. is the dollar value of potential benefits not achieved due to inefficiency in that market d. is typically due to government intervention in that market e. is typically minimized when a government sets a ceiling price