Adverse selection occurs in the insurance market because:
A. the seller has more information than the buyer.
B. the buyer has more information than the seller.
C. both the buyer and the seller have incomplete information.
D. Any of these could be the cause of adverse selection in insurance market.
B. the buyer has more information than the seller.
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Firms will invest in new equipment whenever:
A. public saving is greater than private saving. B. the expected cost of the equipment exceeds the expected benefit. C. the expected cost of the equipment is less than the expected benefit. D. the expected cost of the equipment is greater than the value of the marginal product of the equipment.
When determining whether to shut down in the short run, a competitive firm should ignore (i) fixed costs. (ii) variable costs. (iii) sunk costs
a. (iii) only b. (i) and (iii) only c. (ii) only d. (i), (ii), and (iii)
In which of the following regions would you most expect to see labor-intensive production?
a. Japan b. Western Europe c. southeast Asia d. the United States
At one time, sea lions were depleting the stock of steelhead trout. One idea to scare sea lions away from the Washington coast was to launch fake killer whales, which are predators of sea lions. The cost of making the first whale is $16,000 ($5,000 for materials and $11,000 for the mold). The mold can be reused to make additional whales, and so additional whales cost $5,000 each. Based on these numbers, the average total cost of making five fake killer whales would be:
A. $11,000. B. $36,000. C. $7,200. D. $5,000.