Which of the following theories states that people who are highly risk-averse are less likely to engage in high-risk activities?
a. The theory of moral hazard
b. The theory of adverse selection
c. The propitious selection theory
d. The death spiral theory
C
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A bowed outward production possibilities frontier occurs when
A) opportunity costs are constant. B) resources are not scarce. C) as more of a good is produced, producing additional units of it require greater reductions in the other good. D) the society is operating on the production possibilities frontier.
Gwen’s decision to buy a new television instead of a bicycle for the same price
A. means that opportunity cost is zero since both cost the same amount. B. would not have involved trade-off and opportunity cost if Gwen had decided to put the money in a bank CD instead. C. would not imply a trade-off because of scarcity if Gwen were a multimillionaire. D. means that the opportunity cost to Gwen is the bicycle that she has given up.
Sweatshirts and tee-shirts are complements in consumption and the price of a sweatshirt increases. As a result, the demand for
A) sweatshirts will increase that is, the demand curve will shift rightward. B) tee-shirts will increase that is, the demand curve will shift rightward. C) sweatshirts will decrease that is, the demand curve will shift leftward. D) tee-shirts will decrease that is, the demand curve will shift leftward.
In a perfectly competitive market, in the long run, arbitrage profits will be bid away
Indicate whether the statement is true or false