Refer to Table 6-2. Assume that an economist has estimated the price elasticity of demand values in the table above. Use the data in the table to select the correct statement
A) The difference in elasticity values is explained by the fact that the more narrowly we define a market the more elastic the demand will be.
B) There are fewer substitutes for "All carbonated soft drinks" than there are for "All soft drinks."
C) The elasticity for "All soft drinks" is less than the elasticity for Coca-Cola because Coca-Cola is more of a luxury than a necessity; "All soft drinks" represent goods that are more necessity than luxury.
D) The demand for Coca-Cola is inelastic.
A
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A manager believes there is a 10 percent chance their firm will have to pay $500,000, a 20 percent chance that they will have to pay $400,000 and a 70 percent chance they will be found innocent and pay nothing except the legal fees of $100,000. If the manager chooses to not enter into the litigation and to settle for $230,000 (pay the plaintiff), which of the following is true?
A) The manager is risk intolerant. B) The manager is a risk lover. C) The manager is risk neutral. D) The manager is risk averse.
"Trade restrictions such as tariffs and quotas are like a blockade that a nation imposes on its own people." Is this statement true?
A) Uncertain, the statement is true if the gains of the residents exceed those of foreigners; otherwise it is false. B) Yes, both the trade restrictions and a blockade will reduce the gains from specialization and trade. C) No, a blockade will help the residents of a nation achieve a higher income level; trade restrictions will not. D) No, trade restrictions will help the residents of a nation achieve a higher income level; a blockade will not.
The most obvious measure of low levels of economic development is low _____.
Fill in the blank(s) with the appropriate word(s).
Lindsey's auto-insurance company issued her a policy that required the installation of a devise that monitors her driving habits. Lindsey is confused because she had never gotten into an accident before she bought the insurance. The insurance company is protecting itself against
a. Adverse selection b. Moral hazard c. Bad drivers d. None of the above