Is a typical person likely to gather more information when buying a new automobile or when voting for a member of the U.S. Congress? Why?
What will be an ideal response?
The typical person is likely to gather more information when buying a new automobile as he or she will be significantly and immediately impacted by this decision. When voting for a member of Congress, the person is only one of many voters and his or her vote is therefore diluted among all other votes and is likely to have very little impact. Because of this, there is little incentive to invest the time and energy to gather information about the candidates.
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When the credit demand curve is relatively flat:
A) the quantity of credit demanded is relatively sensitive to changes in the real interest rates. B) the quantity of credit demanded is relatively sensitive to changes in the taxation rates. C) the quantity of credit demanded is not responsive to changes in the taxation rates. D) the quantity of credit demanded is not responsive to changes in the real interest rate.
The figure above shows the production possibilities frontier for a country. A combination of 3 million gallons of milk and 3 million gallons of ice cream is
A) unattainable and production efficient. B) unattainable. C) attainable and production inefficient. D) attainable and production efficient. E) More information is needed to determine if the point is attainable or not.
For a monopolistically competitive firm, marginal revenue
A) and price are unrelated. B) is less than the price. C) is greater than the price. D) equals the price.
How can an incomplete contract prevent opportunism? Explain with an example