An airline knows that business travelers have more inelastic demand for travel than vacationers. That is, business travelers are often willing to pay more for airline tickets than vacationers. The airline also knows that business travelers do not like to travel over weekends. When customers request airline tickets that do not involve travel over a weekend, the airline determines that a traveler
is likely a business traveler and charges a higher price. This is an example of
a. moral hazard.
b. signaling.
c. screening.
d. adverse selection.
c
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Suppose your expenses for this term are as follows: tuition: $28,000, room and board: $9,000, books and other educational supplies: $2,500
Further, during the term, you can only work part-time and earn $16,000 instead of your full-time salary of $42,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college? A) $36,500 B) $56,500 C) $65,500 D) $72,500
An example of an increase in b, the efficiency of human capital accumulation, is
A) more mandatory school years. B) better teachers. C) better school material. D) better total factor productivity.
Unanticipated inflation occurs when
A) everyone knows perfectly the true rate of inflation. B) the actual inflation rate differs from the anticipated inflation rate. C) the inflation rate is zero. D) there is no change in the purchasing power of money.
Which of the following is a diversity of industry argument in favor of restrictions on foreign trade? a. Foreign producers must be prevented from exporting their goods below cost of production
b. Domestic workers must be protected from the lower wages paid in foreign countries. c. The nation's security demands we ensure an adequate domestic supply of certain strategic goods. d. Don't have all of your eggs in one basket. e. Industries in the early stages of development must be protected from more mature producers.