The moral hazard problem arises primarily because of:
The moral hazard problem arises primarily because of:
A. Individual bargaining
B. Negative externalities
C. Asymmetric information
D. Poorly defined property rights
C. Asymmetric information
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The Consumer Price Index includes the prices of only those goods
a. purchased by consumers b. purchased by consumers and produced in the United States c. that are brand new and purchased by consumers d. purchased by consumers and government e. purchased by consumers, government and firms
A labor contract provides for a first-year wage of $10 per hour, and specifies that the real wage will rise by 3 percent in the second year of the contract and by another 3 percent in the third year. The CPI is 1.00 in the first year, 1.07 in the second year, and 1.15 in the third year. What dollar wage must be paid in the third year?
A. $12.20 B. $12.31 C. $11.15 D. $10.61
Firms in a cartel usually charge:
A. the same price. B. different prices to reflect their different costs. C. lower prices than a monopoly would. D. higher prices than a monopoly would.
Answer the following statements true (T) or false (F)
1. According to the legal cartel theory of regulation, firms desire to have government regulation because it protects them from competition. 2. Most economists conclude that deregulation has reduced prices and led to more competition in deregulated industries. 3. Social regulation consists of regulating the behavior of people in society in order to promote the safety and harmony in neighborhoods. 4. One good example of a government agency involved mainly in social regulation is the Food and Drug Administration. 5. Supporters of social regulation contend that it has provided net benefits to society in the form of greater safety, a better environment, and less discrimination.