Specialization:
a. is a way for individuals to make the best use of resources by devoting themselves to one primary productive activity.
b. is a way for society to become wealthier while not using their resources
c. is a way for people to avoid having to trade.
d. increases one's opportunity cost of the activity they choose to specialize in.
a
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The risk premium is
A) the amount by which the expected return on a risky asset exceeds the return on an otherwise comparable safe asset. B) a measure of the riskiness of the overall economy in a domestic country compared with a foreign country. C) the amount an investor must pay to insure his or her stock portfolio to protect against a fall in value. D) the amount an investment bank charges to guarantee an annuity that pays a fixed rate of return in the future.
Adverse selection:
A. results from unobserved characteristics of people or commodities. B. is about the actions of people. C. occurs after the parties have entered into an agreement. D. All of these statements are true.
Private goods are characterized by two important attributes. What are they?
a. marginality and depletability b. scalability and desirability c. repeatability and reliability d. depletability and excludability
Suppose that in a free market 2,000 patients purchase an operation to receive an artificial heart at a price of $500,000 per operation. Without the heart, each patient will die. The government decides this price is too high and imposes a maximum price of $200,000 . Everything else equal,
a. more patients will now die. b. fewer patients will now die. c. more patients will now die only if the demand curve is vertical. d. more patients will now die only if the demand curve is horizontal.