In the context of insurance, moral hazard refers to:
A. when risks are shared across many different assets or people, reducing the impact of any particular risk on any one individual.
B. the tendency for high-risk individuals to seek out more insurance than low-risk individuals.
C. when people organize themselves in a group to collectively absorb the cost of the risk faced by each individual.
D. the tendency for people to behave in a riskier way after they have acquired insurance.
Answer: D
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Consider the market for cellular phones. Which of the following shifts the demand curve leftward?
A) studies showing using cellular phones can cause brain cancer B) a decrease in the price of cellular phones C) a decrease in the quantity demanded of cellular phones D) an increase in the services provided by cellular phones, such as text messaging E) an increase in the price of cellular phones
Suppose the population of Tiny Town is 100 people and the working age population is 70. If 10 of these people are unemployed, the unemployment rate in Tiny Town is
A) 10 percent. B) 10/70 × 100. C) 10/80 × 100. D) There is not enough information provided to calculate the unemployment rate.
The accompanying table below shows the relationship between the number of times you get your car washed each month and your total monthly benefit from car washes. Each car wash costs $15. Number of Car Washes Per MonthTotal Monthly Benefit from Car Washes0$01$202$363$484$565$60 How many times a month should you get your car washed?
A. 4 B. 1 C. 3 D. 2
Suppose Johnson's Rubber Factory belches black smoke into the air over the city of Bellowsville. If the city of Bellowsville attempts to internalize the external costs associated with the production of rubber with a pollution tax, then we expect:
A. at each price, a smaller quantity of rubber will be supplied by Johnson's Rubber Factory. B. at each price, a larger quantity of rubber will be supplied Johnson's Rubber Factory. C. Johnson's Rubber Factory will not change the amount of rubber supplied at each price. D. Johnson's production costs not to change.