Suppose there are two small island countries: Avarice, which is populated by people who are completely self-interested, and Altruism, which is populated by people who have adopted social norms of generosity and cooperation. Commitment problems will be:
A. prevalent on both islands.
B. largely avoided in Avarice, but prevalent in Altruism.
C. largely avoided in Altruism, but prevalent in Avarice.
D. largely avoided on both islands.
Answer: C
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An individual demand curve can be derived from the ________ curve
A) price-consumption B) price-income C) income-substitution D) income-consumption E) Engel
A student has a job that pays a wage rate of $10 per hour. The night before an economics exam, the student has set aside four hours to study for the exam, estimating that for each hour spent studying, her grade will rise by 5 points
That night, she gets a call from her employer to come to work for a wage rate of $15 per hour for that night. She decides to work for three hours and earn an extra $45.00. The next day she takes the test and gets a grade of 75. The opportunity cost for her work is A) the $45.00 she earned. B) the 15 extra points she estimates that she could have earned on the exam if she had studied the extra three hours. C) the three hours she did not study. D) the entire four hours she set aside for studying.
At the point where diminishing marginal returns set in, the slope of the total product curve is
a. positive and increasing b. positive and decreasing c. negative and increasing d. negative and decreasing e. constant
Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital). In the short run, the firm most likely considers
a. both labor and capital to be fixed. b. both labor and capital to be variable. c. labor to be variable and capital to be fixed. d. capital to be variable and labor to be fixed.