Life insurance companies usually require applicants to have physicals and disclose information on their health. This practice is designed to address
a. a principal-agent problem.
b. a moral-hazard problem.
c. a problem involving hidden characteristics.
d. all of the above are correct.
c
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Which of the following is NOT an example of price discrimination?
a. A restaurant sets a fixed cover charge in addition to menu charges. b. A phone company charges different rates to residential and business users. c. An electric company charges different rates to senior citizens and younger adults. d. An airline sets different fares for adults and children.
When a third party pays a larger and larger share of the purchasing price of a good, economic theory indicates that the
a. demand for the good will decline. b. consumers of the good will have less and less incentive to economize on its use. c. suppliers of the good will have a stronger incentive to provide the good at low prices. d. prices of the good will tend to decline with the passage of time.
The business cycle is measured by the
a. production of goods and services. b. number of people employed. c. the interest rate. d. Both a and b are correct.
Economic activity moves from a trough into a period of ________ until it reaches a ________ and then into a period of ________.
A. expansion; peak; recession B. recession; peak; expansion C. expansion; trough; recession. D. recession; trough; expansion