Anthony Downs, in The Economic Theory of Democracy, argues that voters choose to remain “rationally ignorant” when they vote in elections, knowing relatively little about the candidates or the issues. What economic principle would you invoke to explain this behavior?
A. Public good theory
B. Moral hazard
C. The cost of information
D. Risk aversion
Answer: C
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Which of the following is a difference between a second-price sealed-bid auction and an English auction?
A) The highest bidder wins in a second-price sealed-bid auction while the second-highest bidder wins in an English auction. B) The second-highest bidder wins in a second-price sealed-bid auction while the highest bidder wins in an English auction. C) Bids are placed privately in a second-price sealed-bid auction while bids are placed publicly in an English auction. D) Bids are placed one after another in a second-price sealed-bid auction while bids are placed simultaneously in an English auction.
Even though the market for bricks has a low concentration ratio nationally, the U.S. Justice Department might still scrutinize any mergers in this industry because the
A) HHI is high nationally. B) HHI is above 1800 nationally. C) HHI is below 1800 nationally. D) market is regional not national, and the regional concentration might be high.
A monopolistically competitive firm produces a good or service that has no close substitutes
Indicate whether the statement is true or false
Demand-side economists treat saving as a leakage from potential spending.
Answer the following statement true (T) or false (F)