A lender faces a(n) ________ problem if borrowers with a greater chance of defaulting on their loans get loans from the lender.
A. free?rider
B. external cost
C. moral hazard
D. adverse selection
Answer: D
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If a person's compensated demand (or MWTP) curve is perfectly vertical, the good is borderline between regular inferior and Giffen for this consumer.
Answer the following statement true (T) or false (F)
Absolute advantage is
A) the ability to produce a good or service at a higher opportunity cost than one's competitors. B) the ability to produce more of a good or service than competitors that have fewer resources. C) the ability to produce more of a good or service than competitors when using the same amount of resources. D) the ability to produce higher quality goods compared to one's competitors.
Exemptions and deductions are used
A) to determine what items are subject to sales taxes. B) by taxpayers to reduce the amount of income subject to tax. C) to add to taxes that must be paid. D) to determine the type of tax structure.
When buying a car from a dealership, to get the best bargain
a. Allow the dealership to make the first offer b. Keep a cushion of bargaining space in the quoted price c. Make a take it or leave it offer d. All of the above