If Ben becomes less likely to buy smoke detectors after he has fire insurance, he is illustrating
A) moral hazard.
B) adverse selection.
C) the lemon problem.
D) the free rider problem.
A
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How is the concept of present value useful in deciding whether or not to undertake an investment project?
What will be an ideal response?
According to the quantity theory, inflation is ultimately controlled by
a. private firms who set prices. b. the monetary authorities who control the money supply. c. those who control output. d. the price of oil.
Relative to a mobile factor of production, economic theory suggests that the price elasticity of supply for a highly immobile factor of production (for example, land) will be
a. more elastic. b. less elastic. c. of unitary elasticity. d. this is a trick question; the price elasticity of supply for factors of production is not affected by factor mobility.
A very high fixed cost and a relatively low marginal cost is associated with
A. an information product. B. an experience good. C. every type of good or product. D. a persuasive good.