Question

18. The difference between what buyers pay for a unit of a good and what sellers receive is known as the *

brokerage fee.

tax (tax wedge).

cost of production.

interest (interest rate).

19. Diversification does which of the following? *

Reduces expected returns

Does not impact expected returns

Increases expected returns

20. When businesses pay their sales people based on their performance relative to their peers, this is known as *

salary pay.

a tournament.

a piece rate system.

a compensation rate schedule.

21. When inside information becomes public information, profit opportunities *

decrease.

remain the same.

increase.

change, but the direction cannot be determined.

22. Diversification is an investment strategy to *

minimize risks in personal banking.

maximize returns in bond investments.

reduce the risk of a given investment portfolio.

outperform the DJIA (Dow Jones Industrial Average).

23. __________ determine(s) whether buyers or sellers ultimately bear the majority of the tax burden. *

The amount of a tax

Whom a tax is originally imposed (placed) on

The relative elasticities of demand and supply

The type of tax (such as a commodity tax or a sales tax)

24. An increase in the price of a product leads to *

a decrease in the marginal utility per dollar (MU/P) of that product, which leads to a decrease in the quantity purchased.

a decrease in the marginal utility per dollar (MU/P) of that product, which leads to an increase in the quantity purchased.

an increase in the marginal utility per dollar (MU/P) of that product, which leads to a decrease in the quantity purchased.

an increase in the marginal utility per dollar (MU/P) of that product, which leads to an increase in the quantity purchased.

25. As indifference curves move northeast (to the upper right), bundles of goods along those indifference curves will yield *

lower utility.

the same utility.

higher utility.

utility that is sometimes higher, sometimes the same, and sometimes lower.

Answer 1

18. A gap between price paid by buyers and price recieved by sellers mean that there is some intervention due to which market did not equilibriate to the point where price paid by buyer equals price recieved by seller.

option a is incorrect because brokerage fee would be a money paid to the broker. A broker is another individual selling his brokery service. There price paid to broker=paid recieved by him. And for the main seller, price recieved will equal price paid.

option b is correct. When a tax is imposed, sellers recieve less than what the price is while consumers pay more than equilibrium price. The difference in the two incurrs to the government.

option c is incorrect because cost of production is reflected by price charged by seller (supply curve). This will not create the difference between seller's price and buyer's price.

option d is incorrect because interest rates are an internal affair for either the seller or buyer. It has nothing to do with the gap created. this is an irrelevant option.