In recent years, the poorest 20 percent of the U.S. population received approximately 15 percent of the total income
a. True
b. False
Indicate whether the statement is true or false
False
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In an ad for insurance, the text reads "Life's an adventure, and there are plenty of perils awaiting your jewelry: a lost or broken stone, theft, accidental loss, damage, mysterious disappearance Have you thought about insurance?"
What is the economic reasoning for an individual to buy insurance? A) Individuals who buy insurance are profit maximizers. B) Individuals who buy insurance are rational. C) Individuals who buy insurance are dishonest and can profit from dishonesty. D) Individuals who buy insurance increase their expected utility by owning insurance.
Increasing the amount of information available to investors helps to reduce the problems of ________ and ________ in the financial markets
A) adverse selection; moral hazard B) adverse selection; risk sharing C) moral hazard; transactions costs D) adverse selection; economies of scale
The motivating force behind an increase in supply in a long-run adjustment to equilibrium is
a. lower prices b. economic profits that are present in the short run c. higher profit expectations among owners of firms in the industry, triggered by increased prices d. normal profits witnessed by individuals outside the industry that trigger entry e. the decreases in average cost that can be obtained through economies of scale
If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a rational firm should
a. reduce the labor used and increase the machinery used if labor costs half as much as machinery. b. reduce the labor used and increase the machinery used if labor and machinery cost the same amount. c. reduce the labor used and increase the machinery used only if labor costs more than twice as much as machinery. d. reduce the labor used and increase the machinery used only if labor costs exactly twice as much as machinery.