Suppose that you have returned from your fishing expedition with 20,000 fish. The market price is $3 per fish. Your average fixed cost was $1 and your total variable cost was $5,000 . If the price jumps to $3.50 before you sell your first fish, how much extra profit, if any, do you earn?
a. $10,000
b. $25,000
c. $30,000
d. $45,000
e. $70,000
A
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Adverse selection occurs when
A) a person takes more risks that are not known to the life insurance company because he has life insurance. B) a person buys life insurance because he has a risky lifestyle that is not known to the life insurance company. C) a person is a risk lover. D) pregnant women with health insurance make more doctor visits than uninsured pregnant women.
Assume that a VER (voluntary export restraint) is imposed on an imported product. The difference between the domestic price and the world price is captured by:
A. The government B. Foreign exporters C. Domestic consumers D. Domestic workers
A sign that the Federal Reserve is moving to raise interest rates would be
A) an increase in bank reserves. B) large purchases of Treasury securities by the Federal Reserve. C) a widening gap between the Treasury bill yield and the discount rate. D) a narrowing gap between the Treasury bill yield and the discount rate.
Which of the following is not a finding of Cox and Alm regarding the gap between rich and poor?
a. The gap shrinks if taxes are taken into account. b. The gap shrinks if consumption, rather than income, is compared. c. The gap shrinks if the number of people in the household is taken into account. d. The gap shrinks if the state of residence is taken into account.