As the economy recovers from a recession, we should expect that demand for
a. inferior goods will fall and demand for non-inferior goods will rise
b. all goods will rise
c. inferior goods will rise and demand for non-inferior goods will fall
d. all goods will fall
e. complements will fall
A
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Insurance companies are not permitted to require AIDS tests as a precondition for coverage, so they do not know whether or not the people they insure have already contracted HIV (the virus that causes AIDS). This situation is an example of
a. signaling. b. adverse selection. c. the principal-agent problem. d. moral hazard.
State colleges are an example of
A) income maintenance programs. B) Social Security. C) welfare programs. D) subsidized services.
Refer to Table 15-1. When producing the profit-maximizing output, what is the amount of the firm's profit?
A) $335 B) $350 C) $880 D) $910
Other things equal, the ________ the real interest rate, the ________ the potential pool of borrowers
A) higher; less risky B) higher; more risky C) lower; smaller D) lower; less qualified