The profits from firms who engage in first-degree price discrimination are_____.
A. price-gouging their customers
B. showing increased opportunity costs
C. less than firms who do not use price discrimination
D. equal to consumer surplus
Answer: D
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An economy with only the household and firm sectors is called:
A) a mixed economy. B) a private economy. C) a command economy. D) none of the above.
A type of ________ problem that occurs when a person or institution has multiple objectives that conflict with each other is called ________
A) moral hazard; conflicts of interest B) adverse selection; conflicts of interest C) moral hazard; spinning D) adverse selection; spinning
Adverse selection in insurance requires that
a. potential customers face different levels of risk b. potential customers facing more risk are no more interested in purchasing insurance c. people are not risk averse d. insurers can tell higher risk people from lower risk people
The signaling theory of education maintains that workers who complete specific levels of education enhance their productivity through education
a. True b. False Indicate whether the statement is true or false