Moral hazard:
A. always happens when adverse selection is a problem.
B. can happen when adverse selection is a problem.
C. never happens when adverse selection is a problem.
D. None of these statements is true.
Answer: B
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If a consumer increases her quantity of ice cream consumed by 100% when her income rises by 25%, then her income elasticity of demand for ice cream is
A) 8.0. B) 4.0. C) .25. D) .08.
The illegality of organ sales from willing donors to willing recipients is ineffective because:
a. It encourages organ sales b. It discourages wealth creating transactions through the threat of heavy penalty c. It encourages government intervention d. None of the above
Conditional cash transfer programs are programs in which:
A. financial support is given only to people who have paid into the program for a minimum amount of time. B. financial support is given only to people who engage in certain actions. C. financial support is given only to people who agree to pay it back at reduced interest to the government in the future. D. None of these is true.
When the government imposes an effective price ceiling on a monopolist, what will be sure to happen in the short run?
A. The dollar price will increase. B. There will be a shortage of the product. C. The dollar price will fall. D. There will be a surplus of the product.