ECO 316 Week 2 Chapter 11 Reducing Transactions Costs and In

 In this paperwork of ECO 316 Week 2 Chapter 11 Reducing Transactions Costs and Information Costs you will find the answers on the next questions:


 11.1 Multiple Choice Questions

 1) Why did one prominent economist state that in the late 1990s "hundreds of billions of dollars were being left on the table" in Eastern Europe?

 2) Which of the following was a consequence of the poorly developed financial markets in Eastern Europe in the 1990s?

 3) What solution did most financial experts suggest be undertaken in response to the poorly developed financial markets in the 1990s?

 4) Transactions costs are

 5) Information costs

 6) The presence of transactions costs and information costs

 7) resence of transactions costs and information costs

 8) Which of the following is NOT an example of transactions costs?

 9) Small savers face

 10) Small savers face

 11) Financial intermediaries emerged

 12) Transaction and information costs

 13) Banks earn a profit by

 14) It is generally agreed that

 15) Financial intermediaries reduce transactions costs by

 16) Economies of scale are

 17) Individual investors can reduce transactions costs by

 18) Which of the following does NOT represent a way in which financial intermediaries take advantage of economies of scale?

 19) Financial intermediaries are able to exploit economies of scale since

 20) The reduction in transactions costs brought about by financial intermediaries benefits

 21) The assumption of symmetric information means that

 22) Symmetric information

 23) When there's asymmetric information, who tends to have the better information?

 24) Generally, when there is asymmetric information

 25) The company that manufactures Screaming Chocolate Zonkers breakfast cereal finds that its sales collapse, it is forced into bankruptcy, and it defaults on its bonds, as a result of an unexpectedly harsh report from the Surgeon General condemning excessive chocolate eating by children. This incident is best thought of as an example of

 26) The assumption of asymmetric information means that

 27) The company that manufactures Screaming Chocolate Zonkers breakfast cereal finds that its sales collapse, it is forced into bankruptcy, and it defaults on its bonds, as a result of information on the filthy conditions in its factory, which had long been known to management, leaking out to the general public. This incident is best thought of as an example of

 28) Which of the following is NOT true of adverse selection?

 29) Which of the following is NOT true of moral hazard?

 30) Which of the following is an example of adverse selection?

 31) Which of the following is NOT an example of adverse selection?

 32) The "lemons problem" in the used car market arises from

 33) The "lemons problem" exists in the market for goods because

 34) Which economist is credited with having been the first to discuss the "lemons problem"?

 35) The "lemons problem" is overcome in the used car market by

 36) You own a 2007 Ford Explorer. Although it has high mileage, you have maintained it very well. You want to sell it, but after checking the prices other owners of 2007 Ford Explorers are able to get for their cars in the used car market, you decide the prices are too low and you decide not to sell. This is an example of

 37) If there were no adverse selection problems in the stock market,

 38) When interest rates i

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