Which is NOT an example of moral hazard
a. people eat less at all-you-can-eat buffets
b. loggers clear-cut a tract of land rather than when paying per tree felled
c. Drivers of heavier, safer cares are more likely to run stop signs
d. workers on commission work harder than those paid an hourly wage
a
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Suppose Bright Orange is large firm that grows and harvests oranges. Each orange yields 2 ounces of orange juice and exactly one orange peel. The market for oranges is perfectly competitive and Bright Orange sells the orange juice to juice distributors and the orange peels to fragrance companies. At a quantity of 500,000 oranges, juice distributors will pay $0.05 per ounce of orange juice and
fragrance companies will pay $0.10 per orange peel. At the quantity of 500,000 oranges, what is the market equilibrium price of an orange? A) $0.05 B) $0.20 C) $0.15 D) $0.10
John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance he will earn $100,000 and a 50 percent chance he will earn $300,000. If he does expand, there is a 30 percent chance he will earn $100,000, a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000. It will cost him $150,000 to expand. John expects the value of his earnings to be ________ if he expands and ________ if he does not expand.
A. $320,000; $200,000 B. $170,000; $50,000 C. $120,000; $200,000 D. $30,000; $200,000
In examining the national income accounts of the closed economy of Nepotocracy you see that this year it had taxes of $100 billion, transfers of $20 billion, and government purchases of goods and services of $70 billion. You also notice that last year it had private saving of $70 billion and investment of $50 billion. In which year did Nepotocracy have a budget deficit of $20 billion?
a. this year and last year b. this year but not last year c. last year but not this year d. neither this year nor last year
A change in government purchases has the greatest effect on the economy in the short run when _____
Fill in the blank(s) with the appropriate word(s).