Moral hazard is the
A) outcome of a Prisoner's Dilemma.
B) result of market signaling.
C) risk associated with a Dutch auction.
D) risk that one party to a contract may alter its post-contract behavior to the detriment of another party.
D
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If four workers can produce 18 chairs a day and five can produce 20 chairs a day, the marginal product of the fifth worker is
A) 2 chairs. B) 3 chairs. C) 4 chairs. D) 38 chairs.
Consumer debt increases. What is the impact on aggregate expenditures and income?
A) Both increase. B) Both decrease. C) Aggregate expenditure increases and income decreases. D) Aggregate expenditure decreases and income increases.
When airplanes take off and land at Logan Airport, the residents of East Boston complain about the noise. The same planes make the same noise during the trip to Boston from Paris, but on this run, over the Atlantic
a. the sound is muffled at high altitudes, creating less market failure b. market failure does not apply because it is an international flight c. there are no externalities because there are no third parties d. the positive externalities of the flight outweigh the negative externalities of the noise e. free riders are more numerous so that market failure is eliminated
If nations such as Germany, Japan, and the United States prohibited international trade in automobiles, a likely effect would be that
a. the price effect would become a more significant consideration for each firm that makes automobiles. b. the excess of price over marginal cost would become less pronounced in the automobile market. c. all countries would become better off. d. automobile producers in the U.S. would collude to produce a large number of cars.