Suppose someone knew that the probability of incurring a $10,000 medical expense was 5%, and the odds of being healthy and incurring no expenses was 95%. If they used that information to compare the expected cost to them ($500) with the $500 premium it would cost to get full coverage and decided to buy the insurance, but only if the price went no higher then economists would say, they are
A. risk-neutral.
B. risk-loving.
C. risk-averse.
D. irrational.
Answer: A
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There is a deadweight loss if a natural monopoly is regulated to use
A) marginal cost pricing and if it is regulated to use average cost pricing. B) average cost pricing and if it is allowed to be unregulated and maximize its profit. C) marginal cost pricing and if it is allowed to be unregulated and maximize its profit. D) None of the above answers is correct.
Look at today's Wall Street Journal. What is the leading economic news story? With which of the big economic questions does it deal and what tradeoffs does it discuss or imply?
What will be an ideal response?
The use of common property resources:
A. reduces positive externalities in many cases. B. reduces negative externalities in many cases. C. leads to positive externalities in many cases. D. leads to negative externalities in many cases.
A nation's growth rate will most likely ________ as it converges to a new, higher balanced growth path
A) speed up B) slow down C) maintain its current pace D) become negative