What would be an example of economies of scope achieved in the automobile insurance industry?
What will be an ideal response?
The auto insurance industry can achieve economies of scope, for example, by also offering to insure homes, boats, and people's lives. There could be cost savings, compared to selling each kind of insurance by different specialized companies, because one sales force can sell all kinds of policies. Also, there would not have to be multiple buildings for the headquarters and branch offices, computer networks, or cars for the sales agents.
You might also like to view...
If an economy has a fixed exchange rate and it chooses to issue $10 million in bonds, what will happen according to the Monetary approach?
A) It will have to increase its foreign exchange reserves. B) It will have to decrease its foreign exchange reserves. C) It will have to allow its currency to appreciate. D) It will have to allow its currency to depreciate.
In the ultimatum game, one reason players don't choose the rational offer is
A) that there are too many possible outcomes to reasonably consider. B) they are worse off by taking the offer. C) they prefer to sacrifice to punish "unfair" behavior. D) that it is not a Nash equilibrium.
Which of the following describes that people cannot examine every possible choice available to them but instead use simple rules of thumb to sort among the alternatives that happen to occur to them?
A) self-interest B) bounded rationality C) ceteris paribus D) normative economics
Suppose the inflation rate of a country falls from 8 percent during 2002-2004 to 6 percent in 2005-2007, under the adaptive expectations hypothesis what will the expected rate of inflation at the beginning of 2008?
a. 2 percent b. 4 percent c. 6 percent d. 8 percent