FancyFoods restaurant decided to introduce an all-you-can-eat buffet on Tuesdays and Wednesdays to increase business. They found that they acquired a whole new set of customers, most of whom were very big eaters. After a time, they increased the price of the buffet. FancyFoods suffered from the problem of
A. incentives.
B. adverse selection.
C. excessive high costs.
D. implicit contracts.
Answer: B
You might also like to view...
One way to restructure Social Security to meet its future obligations would be to _____
a. lower the retirement age b. reduce Social Security benefits c. increase benefits only on the poor d. eliminating pay-as-you-go
As the interest rate __________, the opportunity cost of holding money __________ and individuals choose to hold __________ money
A) increases; increases; more B) increases; decreases; more C) increases; decreases; less D) decreases; increases; more E) decreases; decreases; more
The most desirable rate of output for a firm is the output that
A. Maximizes total revenue. B. Minimizes marginal costs. C. Maximizes total profit. D. Minimizes total costs.
The price of a gallon of gasoline increased from $2.00 to $2.25 while the price of a ride on the city bus increased from 50 cents to 75 cents. The relative price of riding the city bus
A) increased from 0.25 to 0.6. B) decreased from 4.0 to 3.0. C) stayed constant at 0.25. D) stayed constant at 4.0.