New safety regulations increase manufacturers' costs of producing insulation. What happens in the market for insulation?
a. The demand falls as buyers refuse to bear the higher production costs.
b. The supply falls, resulting in a higher equilibrium price and lower equilibrium quantity.
c. Both supply and demand fall, resulting in less insulation being bought and sold.
d. The supply rises as manufacturers attempt to use higher sales to offset their lower profit margins.
b. The supply falls, resulting in a higher equilibrium price and lower equilibrium quantity.
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Use the following information to answer the next question.C = A + .875(Y - T)A = $10,000I = $2,000G = $2,500T = $1,000NX = $1,025What will be the change in consumption if net exports decrease by $250?
A. Consumption will not change. B. Consumption will fall by $1,750. C. Consumption will rise by $218.75. D. Consumption will fall by $250.
We can say that a contract is able to prevent moral hazard when
A) it eliminates production inefficiencies due to moral hazard without shifting risk to risk-averse people. B) it eliminates production inefficiencies due to moral hazard without shifting risk to risk-loving people. C) it shifts risk to risk-loving people. D) it eliminates production inefficiencies due to moral hazard and shifts risk to risk-averse people.
A person who would work for 15 more years earning $35,000 per year and discounts the future at an interest rate of 5.5% per year has an annually-compounded discounted expected present value of current and future earnings equal to
A. $351,315. B. $856,225. C. $622,881. D. $201,723.
Critics of supply-side economics argue that a major flaw is
A. the small magnitude of supply-side effects. B. the large size of demand-side effects. C. increased income inequality. D. all of the above