Consumer Sovereignty
What will be an ideal response?
Consumers ultimately decide what will be produced (or not produced) by choosing what to purchase (or what not to purchase)
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Refer to Edgeworth Box Economy. In an Edgeworth box, a point where two indifference curves are tangent represents
a. the initial endowment point. b. an allocation that both consumers prefer to the initial endowment. c. a competitive equilibrium. d. a Pareto-optimal allocation of goods.
A key difficulty facing insurance companies is that people know more about their health than do insurance companies, and that those people who are seriously ill are the most likely to want to obtain health insurance
What is this phenomenon called? A) asymmetric information B) moral hazard C) economic irrationality D) adverse selection
When the price of gasoline rises, some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars. The fact that the CPI does not fully account for such changes in consumer behavior is called
A) increase in quality bias. B) outlet bias. C) substitution bias. D) discrimination bias.
Graphically, the market supply curve is obtained by
A) changing the ceteris paribus conditions. B) a change in quantity supplied. C) horizontally summing quantity supplied at various prices for individual producers. D) vertically summing quantity supplied at various prices for individual producers.