Which of the following best illustrates the fallacy of composition?
a. If Jamal had more money, he could afford to buy more goods.
b. If Aisha stood up at a basketball game, she could get a better view of the game; if everyone stood up at a basketball game, everyone could have a better view of the game.
c. If the price of bread rose, consumers would buy less; if consumers bought less bread, the price of bread would rise.
d. High housing prices cause people to buy less housing, but an increase in income might cause them to buy more housing.
Ans: b. If Aisha stood up at a basketball game, she could get a better view of the game; if everyone stood up at a basketball game, everyone could have a better view of the game.
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An insurance company is likely to attract customers who want to purchase health insurance because they know better than the company that they are more likely to file a claim on a policy. This situation describes
A) adverse selection. B) asymmetric information. C) moral hazard. D) a premium death spiral.
How would government's role differ between the balanced and unbalanced growth models?
What will be an ideal response?
Which of the following characteristics distinguishes oligopoly from other market structures?
a. a horizontal demand curve b. a downward-sloping demand curve c. production of homogeneous outputs d. production of differentiated outputs e. interdependence among firms in the industry
A change in the supply of one factor of production
a. will not change either the marginal productivities or the prices of other factors.
b. will not change the prices of other factors, but it may change their marginal productivities.
c. will not change the marginal productivities of other factors, but it may change their prices.
d. changes the marginal productivities and the prices of other factors.