When a hard frost hits orange groves in Florida, the supply of orange juice ________ and price ________
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
C
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Answer the following statement(s) true (T) or false (F)
1. Odds are said to be fair if they reflect the true probabilities of the various states of the world. 2. Risk aversion leads individuals to underinvest from a social point of view. 3. To deal with the problem of adverse selection, insurance companies may limit the amount of insurance that can be purchased at the most favorable odds. 4. An insurance company faces an adverse selection problem when people start taking additional risks after they acquire insurance. 5. A nuclear disaster is an uninsurable risk because it would adversely affect a large number of people simultaneously.
Refer to the above figure. Suppose that the economy was originally at point A, and then it reached point C by means of a fiscal policy action. Which of the following is correct?
A) Point C is both a short-run equilibrium and a long-run equilibrium that could have been attained through an increase in government spending. B) Point C is a short-run equilibrium that could have been attained through a reduction in government spending, but in the long run the economy will end up at point B. C) Point C is a short-run equilibrium that could have been attained through a tax cut, but in the long run the economy will end up at point B. D) Point C is a long-run equilibrium that could have been attained through a tax increase, although reaching this point first required a short-run equilibrium at point B.
Who is likely to earn a higher income, dentists or dental hygienists, and why?
a. dental hygienists because their education is less costly b. dentists because their education is less costly c. dental hygienists because their education is more costly d. dentists because their education is more costly e. neither; they usually earn the same wage rate
A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is called a:
A. production possibilities curve. B. production function. C. consumption possibilities curve. D. supply curve.