In the automobile insurance market, adverse selection occurs when
A) drivers with greater risks buy a policy with large deductibles.
B) drivers with greater risks buy a policy with no deductibles.
C) uninsured drivers drive recklessly.
D) insured drivers drive recklessly.
B
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Savers are willing to lend out money because:
A) they prefer to spend money in the future rather than today. B) the rate of inflation in an economy is normally positive. C) of altruism. D) the rate of inflation in an economy is normally negative.
Refer to Figure 9-3. Without the quota, the domestic price of peanuts equals the world price which is $2.00 per pound. What is the quantity of peanuts supplied by domestic producers in the absence of a quota?
A) 10 million pounds B) 28 million pounds C) 30 million pounds D) 40 million pounds
To find economic profit from accounting profit, it is necessary to
A. add retained earnings. B. add depreciation expense. C. add revenues that the firm can never earn. D. subtract the opportunity cost of capital.
A monopolist's demand curve is P = 10 - 2Q. Thus, the MR is
A. 5 - Q. B. 5 - 2Q. C. 10 - Q. D. 10 - 4Q.