Insurance deductibles __________ the __________ problem of insurance coverage.
A. are meant to reduce; adverse selection
B. are meant to reduce; moral hazard
C. unintentionally worsen; adverse selection
D. unintentionally worsen; moral hazard
Answer: B
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Which of the following is NOT an expected benefit of reducing nontariff barriers to trade?
A) Fewer firms to compete with B) Lower prices for many goods C) Increase in the volume of exports and imports D) Increase in production levels E) Improved overall economic welfare
The owner of a produce store found that when the price of a head of lettuce was raised from 50 cents to $1, the quantity sold per hour fell from 18 to 8. The arc elasticity of demand for lettuce is
A) -0.56. B) -1.15. C) -0.8. D) -1.57.
Even though mass transit systems such as buses are available in most cities in the United States, many residents decide to drive to work in their own vehicles because
A) the opportunity cost of riding a bus is too high for them. B) there is no opportunity cost of them to drive. C) they are not aware of the opportunity cost of driving. D) they do not behave according to the economic way of thinking.
Classical economists predicted that population growth would eventually reduce economic growth because they believed:
A. in the law of diminishing marginal productivity. B. in the law of increasing marginal productivity. C. that production involved increasing returns to scale. D. that production involved decreasing returns to scale.