We can say that a contract is able to prevent moral hazard when
A) it eliminates production inefficiencies due to moral hazard without shifting risk to risk-averse people.
B) it eliminates production inefficiencies due to moral hazard without shifting risk to risk-loving people.
C) it shifts risk to risk-loving people.
D) it eliminates production inefficiencies due to moral hazard and shifts risk to risk-averse people.
A
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An unemployed individual decides to spend the day fishing. The opportunity cost of fishing is
A) zero, because the person doesn't have a job. B) the cost of bait, any other monetary expenses, and the value of the individual's wages while he was working. C) the cost of bait and any other monetary expenses. D) the cost of bait, any other monetary expenses, and the value of the best alternative use of the individual's time.
Japanese Prime Minister Ryutaro Hashimoto was called the "Herbert Hoover of Japan" because he
a. looked like a very distinguished politician. b. advocated vast public works to combat unemployment. c. advocated budget deficit reduction in the midst of a recession. d. advocated easier monetary policy and lower interest rates to combat recession.
Expansionary fiscal policy in an open economy has a
a. greater effect than in a closed economy. b. similar effect in a closed economy. c. smaller effect than in a closed economy. d. greater effect than monetary policy.
The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?
a. marginal cost and demand b. marginal cost and marginal revenue c. average total cost and marginal revenue d. average variable cost and average revenue