CEB Iron makes a large profit, but its waste has reduced the quality of fishing in the nearby river. Their negative spillover best represents a ______.
a. moral hazard
b. adverse selection
c. nonpecuniary cost
d. pecuniary cost
d. pecuniary cost
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
Logrolling _____
a. impedes the work of special interest groups b. makes it easier for politicians to pass special interest legislation c. decreases the total quantity of special interest benefits d. does not depend on the rational ignorance of voters
Refer to the budget line shown in the diagram. The absolute value of the slope of the budget line is:
A. MU C /MU D .
B. one-half.
C. P D /P C .
D. P C /P D
By making managerial compensation depend on the performance of the firm's profits, the firm owner's profits:
A. remain constant. B. fall. C. initially fall, then rise. D. rise.