The budget line
A) shifts to the left as income increases.
B) has a positive slope.
C) is a vertical line.
D) shows the combination of goods that can be purchased at fixed prices and with a given income.
Answer: D
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The optimum tariff is
A) the best tariff a country can obtain via a WTO negotiated round of compromises. B) the tariff, which maximizes the terms of trade gains. C) the tariff, which maximizes the difference between terms of trade gains and terms of trade loses. D) not practical for a small country due to the likelihood of retaliation. E) not practical for a large country due to the likelihood of retaliation.
Which of the following theories states that people who are highly risk-averse are less likely to engage in high-risk activities?
a. The theory of moral hazard b. The theory of adverse selection c. The propitious selection theory d. The death spiral theory
Suppose an employer has monitoring devices established so that the probability of an employee being caught while shirking is 0.2. If the gain to the employee from shirking is $1,000, how large a bond will deter shirking?
What will be an ideal response?
If the elasticity of supply for a good is greater than the government expected: a. Consumers will bear more of the burden of the tax than the government expected. b. Producers will bear more of the burden of the tax than the government expected. c. The tax will raise less revenue than the government expected
d. Both a. and c. are true.