Suppose there are two small island countries: Avarice, which is populated by people who are completely self-interested, and Altruism, which is populated by people who have adopted social norms of generosity and cooperation. Commitment problems will be:
A. largely avoided in Altruism, but prevalent in Avarice.
B. prevalent on both islands.
C. largely avoided in Avarice, but prevalent in Altruism.
D. largely avoided on both islands.
Answer: A
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For a perfectly competitive rancher in Wyoming, if the price does not change, an economic profit could turn into an economic loss if the
A) average total cost curve shifts downward. B) average total cost curve does not change. C) average total cost curve shifts upward. D) marginal cost curve shifts downward. E) average fixed cost decreases.
A good economic model
A) describes every aspect of the economic world, with no exception. B) includes all those features of the world that can be described numerically. C) includes only those features of the world that are needed for the purpose at hand. D) should not include more than two variables.
A bond that pays a yearly interest rate of? $100 is for sale. The interest rate was 10 percent and now is 5 percent. The price of the bond has
A) decreased from $1000 to $500.
B) increased from $1000 to $2000.
C) decreased from $2000 to $1000.
D) increased from $500 to $2000.
We would expect:
A. the demand for Coca-Cola to be less price elastic than the demand for soft drinks in general. B. the demand for Coca-Cola to be more price elastic than the demand for soft drinks in general. C. no relationship between the price elasticity of demand for Coca-Cola and the price elasticity of demand for soft drinks in general. D. none of these to hold true.