Which of the following is not an example of moral hazard?
A. People take poor care of their health because they have health insurance.
B. People drive recklessly because they have medical insurance.
C. People don't lock their doors because they have theft insurance.
D. All of these are examples of moral hazard.
Answer: D
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Economists Gary Becker and Kevin Murphy are associated with which of the following?
A) They discovered that price changes have both income and substitution effects. B) They have argued that social factors are not important in explaining the choices consumers make. C) Consumers appear to receive utility from consuming goods they believe are popular. D) They discovered the first example of a Giffen good.
When you invest in a mutual fund
(A) Your money is invested in a variety of insurance policies. (B) You are guaranteed a fixed return on your investment. (C) Your money is invested in a variety of stocks and bonds. (D) You have easier access to your money than in a savings account.
The rate of interest charged to commercial banks by the Fed for loans is called the ________ rate.
A. federal funds B. discount C. prime D. commercial paper
Refer to the data provided in Table 9.2 below to answer the question(s) that follow.
Table 9.2
Refer to Table 9.2. The market price is $42 and this firm is producing four units of output. Which of the following would you recommend to this firm?
A. Increase output to six units so that marginal cost equals marginal revenue. B. Reduce price to $17 so that marginal cost will equal marginal revenue at 4 units of output. C. Increase output to seven units so that price is less than marginal cost. D. Continue producing four units of output, because the firm is able to make an economic profit.