Suppose the numbers in parentheses represent two points on a line: (59 billion quarts; $4) and (78 billion quarts; $6). The line is most likely a
a. production possibilities frontier for milk.
b. supply curve for milk.
c. demand curve for milk.
d. ray through the origin.
e. time series line.
b
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Suppose an insurance company has estimated that 20 percent of all of its potential policy owners are high-cost and sets a price for their insurance policy with the understanding that 20 percent of its policy owners will be high-cost. If the true percentage of high-cost potential policy owners is 40 percent, the insurance company is likely to face ________.
A) moral hazard B) the principal-agent problem C) adverse selection D) the bad apple problem
Which of the following is reflected in the gross domestic product (GDP)?
a. The value of leisure time b. The value of illegal goods and services c. The value of final goods produced by firms d. The cost of depletion of natural resources e. The value of house maintenance performed by homeowners
Marginal cost pricing is a system of pricing in which the price charged equals the marginal cost of:
A. the last unit produced and the firm earns zero profit. B. each unit produced and the firm earns zero profit. C. the last unit produced and the firm suffers a loss unless the government gives the firm a subsidy. D. the profit-maximization unit and the firm earns an economic profit.
Currency appreciation should reduce net exports and, therefore, decrease aggregate demand.
Answer the following statement true (T) or false (F)