Andy does not bother to lock the door to his house because he has theft insurance. This is an example of:
A. a positive spillover.
B. moral hazard.
C. adverse selection.
D. irrational behavior.
Answer: B
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The cost of producing cigarettes in the United States has increased and at the same time, more and more Americans are choosing to not smoke cigarettes. Which of the following best explains the effect of these events in the cigarette market?
A) Both the supply and demand curves have shifted to the left. As a result, there has been a decrease in the equilibrium quantity and an uncertain effect on the equilibrium price. B) Both the supply and demand curves have shifted to the right. As a result, there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. C) The supply curve has shifted to the right and the demand curve has shifted to the left. As a result there has been an increase in the equilibrium quantity and an uncertain effect on the equilibrium price. D) The supply curve has shifted to the right and the demand curve has shifted to the left. As a result, there has been an increase in the equilibrium price and an uncertain effect on the equilibrium quantity.
In the above figure, the long-run equilibrium price and output are
A) $10 and 10. B) $10 and 12. C) $7 and 8. D) $8 and 10.
The Exxon Valdez oil spill was an exception to the rule. It was the only major environmental disaster in the 1980s
Indicate whether the statement is true or false
If a country increases its basic literacy rates, it will impact its economy by
A. decreasing aggregate demand. B. decreasing aggregate supply. C. increasing aggregate demand. D. increasing aggregate supply.