Which of the following is an example of screening?
a. a man buys an expensive birthday present for his girlfriend
b. an insurance company offers a policy with a high deductible
c. the seller of a used motorcycle knows more about its true condition than a prospective buyer
d. society supports long prison terms for corporate criminals
b
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Based on the figure above, curve D is the firm's
A) marginal cost curve. B) total cost curve. C) average total cost curve. D) average variable cost curve. E) average fixed cost curve.
Unbiasedness and small variance are desirable properties of estimators
However, you can imagine situations where a trade-off exists between the two: one estimator may be have a small bias but a much smaller variance than another, unbiased estimator. The concept of "mean square error" estimator combines the two concepts. Let be an estimator of ?. Then the mean square error (MSE) is defined as follows: MSE( ) = E( – ?)2. Prove that MSE( ) = bias2 + var( ). (Hint: subtract and add in E( ) in E( – ?)2.) What will be an ideal response?
In 2000, many economists believed that the most serious macroeconomic problem confronting the U.S. economy was an inflationary gap. Which policies would be effective in dealing with this problem?
A. Increase transfer payments. B. Increase government purchases. C. Decrease personal income taxes. D. Increase personal income taxes.
If a 10 percent rise in price leads to a reduction in quantity demanded of more than 10 percent,
a. demand is elastic. b. demand is inelastic. c. elasticity of demand is unitary. d. None of the above is correct.