Use the figure above to answer this question. Figure ________ shows a short-run equilibrium in good times because the firm makes a(n) ________

Banks hold capital because

A) they are required to by regulatory authorities. B) higher capital increases the returns to the owners. C) it increases the likelihood of bankruptcy. D) higher capital increases the return on equity.

A risk-neutral individual will make investment decisions purely based on net present value because

A) she doesn't care about utility. B) because utility is a linear function of wealth. C) she loves to take risk. D) net present value is always more than expected utility.