If the opportunity costs of producing a good increase as more of that good is produced, the economy's production possibility frontier will be
A. a negatively sloped straight line.
B. negatively sloped and "bowed inward" toward the origin.
C. negatively sloped and "bowed outward" from the origin.
D. a positively sloped straight line.
Answer: C
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Moral hazard typically occurs because
A) people are dishonest. B) agreements sometimes create incentives that are costly to monitor. C) workers possess diminishing marginal productivity. D) workers possess adverse selection.
The cross-elasticity of labor with respect to capital is the
A. change in wages relative to a change in the price of capital. B. percent change in labor relative to a percent change in capital. C. percent change in wages relative to a percent change in the price of capital. D. percent change in labor relative to a percent change in the price of capital. E. change in labor relative to a change in capital.
If firms in a monopolistically competitive industry are operating with positive economic profit, over time we would see
A. firms alter their advertising rates until they made at least normal profits. B. some firms entering the industry, causing the demand curves of the existing firms to shift to the left. C. some firms entering the industry, causing the market supply curve to shift to the right, lowering price. D. some firms entering the industry, causing the demand curves of the existing firms to shift to the right.
The figure above shows the market for brooms. Which of the following could lead to the production of fewer than 600 brooms?
A) a monopoly B) a deadweight loss C) subsidies D) an external cost E) a big tradeoff