An auto-insurance company introduces an anti-theft device that records how well the customer has secured his car. If the driver locks his car with the monitored lock every day, the rates go down. The company is trying to solve a __________problem
a. Adverse selection
b. Moral hazard
c. Forced bankruptcy
d. None of the above
b
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Suppose the government designates certain areas within a community to be "wetlands," making it illegal to build on the land. What happens to land not classified as "wetlands" within the community? (i) The price of non-wetland land will rise. (ii) The marginal product of non-wetland land will fall. (iii) The marginal product of non-wetland land will rise
a. (i) and (ii) only b. (ii) only c. (i) and (iii) only d. (iii) only
The expansion path sloping __________ means as the firm expands each input is used more and more.
Fill in the blank(s) with the appropriate word(s).
Elasticity of supply looks at
A. How responsive producers are to a change in quantity demanded. B. The responsiveness of sellers to a change in consumer's incomes. C. How responsive sellers are to a change in price. D. How much quantity demanded changes with a change in price.
Suppose a country's currency is a gold coin. One day, speculators find a large gold mine, which doubles the supply of gold coins in the economy. In the short run:
What will be an ideal response?