The free rider problem is caused by the:
A. "rivalness" in consumption of a good leading to the undersupply of it.
B. incentive to oversupply the good since it is nonrival in consumption.
C. nonexcludability of a good leading to the undersupply of it.
D. "rivalness" in consumption of a good leading to the overconsumption of that good.
Answer: C
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Insurance companies offer only unfair insurance because
A) they are run by greedy capitalists. B) they can fool customers into buying it. C) they have operating costs. D) their risks are positively correlated.
Countercyclical policy
What will be an ideal response?
One year before maturity, the price of a bond with a principal amount of $1,000 and a coupon rate of 5% paid annually fell to $981. The one-year interest rate must be:
A. 8.5%. B. 5.0%. C. 7.0%. D. 1.9%.
Rising prices for a natural resource stimulate
A. the development of complements for the resource. B. the development of substitutes for the resource. C. the development of externalities from the resource. D. the tendency to consume before the resource expires.