Refer to the data provided in Table 17.3 below to answer the following question(s). The table shows the relationship between income and utility for Terri.Table 17.3 IncomeTotal Utility $00$20,00010$40,00025$60,00045$80,00075Refer to Table 17.3. Suppose Terri has a 25% chance of becoming disabled in any given year. If she does become disabled, she will earn $0. If Terri does not become disabled, she will earn her usual salary of $80,000. Terri has the opportunity to purchase disability insurance which will pay her her full salary in the event she becomes disabled. How much would such an insurance policy be worth to Terri?
A. $0
B. less than $20,000 but more than $0
C. $20,000 or more
D. indeterminate from the given information
Answer: B
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If one day a terrible disease were to wipe out over one-half of the world's lime trees, which of the following would likely result?
A) The supply curve of lime juice would shift downward and to the right. B) The supply curve of lime juice would shift upward and to the left. C) The demand curve for lime juice would shift to the right. D) The demand curve for lime juice would shift to the left.
Microeconomics is best described as the study of:
A. the choices made by individual households, firms, and governments. B. inflation, unemployment, gross national product, and the nation's economy as a whole. C. how markets interact in the aggregate economy. D. marginal changes in the economy.
If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then profit maximization is achieved when the monopoly sets price equal to
A) 16. B) 21. C) 25. D) 58.
Market signals are
A. used to differentiate those who will drive equally carefully whether or not they have auto insurance from those who drive less carefully when they have insurance. B. used to distinguish between high and low quality and help correct the adverse selection problem. C. actions taken by buyers and sellers to communicate quality in the presence of perfect information. D. only strong if obtaining the signal is more costly for individuals with valued traits than for those with non-valued traits.