The equilibrium level of regulation is where the marginal political benefits to the special interests are equal to the marginal political costs of the foregone regulation
a. True b. False
a
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An example of moral hazard is
a. workers working diligently even though the boss is not looking b. health care insured dieting and exercising c. drivers of safer cars turning their phones off before driving d. borrowers investing their loan proceeds differently than the bank requires
Figure 6.2 illustrates a change in the price of soup. From the graph, we can conclude that:
A. the price of soup has increased and soup is a Giffen good.
B. the price of soup has fallen and soup is a Giffen good.
C. the price of soup has fallen and soup is a normal good.
D. the price of soup has fallen and bread is a Giffen good.
The most likely impact of an effective price floor is:
A. the demand curve will shift to the left. B. a shortage will develop. C. a surplus will develop. D. the supply curve will shift to the right.
Figure 4.4 illustrates the supply of tacos. An increase in the supply of tacos is represented by a movement from:
A. point a to point b. B. point c to point b. C. S2 to S1. D. S0 to S1.