If Tom drives a car more recklessly after he purchases a comprehensive insurance plan, the change in his behavior is an adverse selection problem.
Answer the following statement true (T) or false (F)
False
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This chapter discussed the free-rider problem. Consider the following two situations in relation to the free-rider concept
a. The Taft-Hartley Act (1947) allows workers to be employed at a firm without joining the union at their workplace or paying membership fees to the union. This arrangement is known as an open shop. Considering that unions negotiate terms of employment and wages on behalf of all the workers at a firm, why do you think that most unions are opposed to open shops? b. For your business communication class, you are supposed to work on a group assignment in a team of six. You soon realize that a few of your team members do not contribute to the assignment but get the same grade as the rest of the team. If you were the professor, how would you redesign the incentive structure here to fix this problem?
People are willing to pay more for a diamond than for a bottle of water because
a. the marginal cost of producing an extra diamond far exceeds the marginal cost of producing an extra bottle of water. b. the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water. c. producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have to manipulate water prices. d. water prices are held artificially low by governments, since water is necessary for life.
The ________ is the interest rate commercial banks pay to the Fed; the ________ is the interest rate commercial banks charge each other for short-term loans.
A. discount rate; federal funds rate B. federal funds rate; discount rate C. nominal interest rate; prime rate of interest D. nominal interest rate; real interest rate
People who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called
A) unemployed workers. B) discouraged workers. C) unhappy workers. D) involuntarily unemployed. E) part-time lookers.