An incentive is:
A. the marginal cost of engaging in a course of action.
B. rational behavior that involves thinking on the margin.
C. something that causes people to behave in a certain way by changing trade-offs they face.
D. the marginal benefit of engaging in a course of action.
Answer: C
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The demand for bonds is
A) equivalent to the demand for loanable funds. B) equivalent to the supply of loanable funds. C) represented by an upward-sloping line when the price of bonds is on the vertical axis and the quantity of bonds demanded is on the horizontal axis. D) represented by a downward-sloping line when the interest rate is on the vertical axis and the quantity of bonds demanded is on the horizontal axis.
Which of the following is true of perfect price discrimination compared to charging a single price?
a. Output is greater. b. Output is the same, but profit is higher. c. Output is lower, but profit is higher. d. Output is lower, and profit could be higher or lower. e. Output is the same, but profit is lower.
Mention some of ways in which insurers control the problem of moral hazard
When unregulated monopolies exist,
A. Prices tend to be higher than with a competitive market. B. Externalities occur. C. Quality tends to be higher than with a competitive market. D. Production tends to be higher than with a competitive market.