Exhibit 9-21 -In Exhibit 9-21, D = AR Represents the Market Demand

question 4

Multiple Choice

Exhibit 9-21
-In Exhibit 9-21, D = AR represents the market demand curve for bicycles, MR_m represents the marginal revenue curve for a monopolist producer of bicycles and S_c = MC = AC represents the marginal cost curve for a monopolist producer of bicycles and the market supply curve when the market is perfectly competitive. The consumer surplus in a monopolist market would be

• A) $10
• B) $20
• C) $30
• D) $40
• E) $50

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Definitions:

Money Multiplier

A concept that describes the amount of money that banks can generate with each dollar of reserves.

Percent

A mathematical term describing one hundredth of a particular quantity; a unit of proportion or rate expressed as a fraction of 100.

Reserves

Funds or assets that banks must hold either in their own vaults or on deposit with a central bank, to meet expected withdrawal demands or regulatory requirements.

Reserve Requirement

A regulation that sets the minimum fraction of customer deposits and notes that each bank must hold as reserves, rather than loaning out or investing.