Suppose that a small firm observes that large firms borrow directly from capital markets at a rate of 5%. However, the firm's search costs for finding a lender is 2% (per annum). A small lender (consumer) looking to place their funds directly (and hoping to earn 5%) with this small firm would need to underwrite the borrowing, potentially secure an interest in collateral, and monitor its performance afterwards. These activities would cost 2.5% on an annual basis for the small lender. A financial intermediary can make the borrower and lender both better off if they:

Match each definition in column 1 with a vocabulary word from column 2." some of the entries in column 2 do not apply costs which do not change with the level of output costs which change with the level of output the change in total costs resulting from an increase in output by one unit function showing the quantities of a particular good demanded at a range of price when the quantity supplied of a good is greater than the quantity demanded when the quantity demanded for a particular good is greater than the quantity supplied the price and quantity determined in a market when the supply equals the demand when revenue exceeds costs when costs exceeds revenue output where revenue = costs