In the market for insurance, low risk customers are not served because
a. They do not like buying insurance
b. They are more costly to serve
c. Products designed to be attractive to them are also attractive to high risk types.
d. All of the above
Ans: c. Products designed to be attractive to them are also attractive to high risk types.
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Refer to Figure 10-9. The change in the budget constraint from BC1 to BC2 implies
A) income and the prices of DVDs and CDs have increased. B) the price of DVDs has increased and the price of CDs has decreased. C) the prices of DVDs and CDs have increased. D) the price of DVDs has decreased and the price of CDs has increased.
If a consumer borrows at an interest rate greater than the interest rate at which he or she can lend, then
A) banks cannot make a profit. B) the budget constraint has a kink at the endowment point. C) the consumer must be a lender. D) this makes no difference for consumer behavior.
A rational individual would rather receive $1,000 today than receive $1,100 in one year if the applicable nominal interest rate was 12%
a. True b. False Indicate whether the statement is true or false
The decision to enter or exit an industry is known as the
A. Production decision. B. Profit maximization decision. C. Investment decision. D. Output decision.