If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of the good, demand is said to be
a. of unitary elasticity.
b. relatively inelastic.
c. relatively elastic.
d. perfectly elastic.
B
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Suppose the new doctor you found in the yellow pages turns out to be a charlatan. This is an example of
a. natural selection b. moral hazard c. hidden actions d. external costs e. hidden characteristics
Keeping landing fees low at airports during the "peak" hours
a. perpetuates congestion during those hours. b. is politically unpopular. c. contributes to efficient allocation of airport facilities. d. would lessen the problem of delayed flight landings.
When will speculators' actions raise social welfare?
a. Always. b. When they drive down market prices. c. When their expectations prove to be correct. d. When they are not risk averse.
To avoid subsidies, the government should cap the price for natural monopolies at their:
A. marginal cost. B. fixed cost. C. average total cost. D. average variable cost.