An option buyer
A) has a greater insurance benefit than the purchaser of a futures contract.
B) bears the risk of unfavorable price movements.
C) is purchasing a naked option if he or she does not also own the underlying asset.
D) generally will incur a lower cost than will the purchaser of a futures contract.
A
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For a nation to engage in international trade on the basis of comparative advantage, it should
A. purchase resources from other nations until it acquires a comparative advantage in at least one product. B. produce only those goods in which it has an absolute advantage over other nations. C. specialize in producing those products that have the lowest opportunity cost per unit compared to other nations, then trade some if its output. D. specialize in the production of those goods that have the highest opportunity cost, then trade the excess output.
Adverse selection occurs when
A) a person takes more risks that are not known to the life insurance company because he has life insurance. B) a person buys life insurance because he has a risky lifestyle that is not known to the life insurance company. C) a person is a risk lover. D) pregnant women with health insurance make more doctor visits than uninsured pregnant women.
The price elasticity of demand shows
A) the relationship between market price and household income. B) the proportionate amount by which the quantity demanded changes in response to a proportionate change in price. C) the quantity demanded at a given price. D) the proportionate amount by which the price changes in response to a proportionate change in quantity demanded.
When the consumption schedule is plotted on a graph:
A. Consumption is on the horizontal axis and saving is on the vertical axis B. Consumption is on the vertical axis and saving is on the horizontal axis C. Consumption is on the horizontal axis and disposable income is on the vertical axis D. Consumption is on the vertical axis and disposable income is on the horizontal axis