A government-set price floor on a product:
A. Does not interfere with the rationing function of price in a market system
B. Will drive resources away from the production of the product
C. Will attract more resources towards the production of the product
D. Is intended to benefit the buyers of the product
C. Will attract more resources towards the production of the product
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Explain the moral hazard that automobile insurance companies face. What methods do they employ to try to mitigate this problem? Explain carefully
What will be an ideal response?
You offer an extended warranty for your product that is purchased by a few customers. If the product typically fails 2% of the time,
a. you should price the warranty at less than 2% of the product price b. you should price the warranty at exactly 2% of the product price c. you should price the warranty at more than 2% of the product price d. Cannot tell from this information
If you take $500 out of a savings deposit and put it into a checking account, the immediate effect (do not consider the money multiplier):
a. M1 rises, M2 rises, and the monetary base remains the same. b. M1, M2, and the monetary base rise. c. M1, M2, and the monetary base fall. d. M1, M2, and the monetary base remain the same. e. M1 rises, M2 remains the same, and the monetary base remains the same.
Scarcity and shortages differ in that
A. scarcity is caused by natural disasters and shortages are caused by mistakes people make. B. scarcity is a condition of human life while shortages are usually temporary phenomena related to an imbalance between the amount desired and the amount produced. C. shortages apply to resource markets while scarcity applies to product markets. D. scarcity is a type of shortage but shortage is a broader concept.