Suppose that wages are higher in one geographic region (Region 1) of a country than in another geographic region (Region 2). Given free migration of workers,
a. wages in the two regions will become even more divergent.
b. wages in Region 1 will rise.
c. wages in Region 2 will rise.
d. employment in Region 2 will rise.
c. wages in Region 2 will rise.
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A large company is trying to decide which of two health insurance plans to offer its employees. Plan A has a high monthly premium and a low deductible, and Plan B has a low monthly premium and a high deductible
Adverse selection is likely to be a bigger problem with A) Plan B because it is likely to attract employees who expect high medical costs, and therefore prefer low deductibles. B) Plan A because it is likely to attract employees who expect high medical costs. Healthier employees who do not expect to have many medical bills will not be willing to pay the high premiums. C) Plan B because it is likely to attract healthy employees who do not expect to have many medical bills. Because the monthly premiums are low, the insurance company will have a larger financial burden to bear in the event of claims due to serious illness. D) Plan A because it is likely to attract employees who tend to overuse health care services due to the low deductible. Insurance companies are likely to pay out more in claims than they collect in premiums.
The figure above shows the demand and cost curves for a single-price monopoly. What economic profit does this firm make?
A) zero B) $600 C) $400 D) $200
Consider the budget constraint between "spending today" on the horizontal axis and "spending a year from today" on the vertical axis. Suppose that you have $100 today and expect to receive $100 one year from today. Your money market account pays an annual interest rate of 25%, and you may borrow money at that interest rate. Suppose now that the interest rate decreases to 10%. What happens to the
slope of your budget constraint relative to when the interest rate was 25%? The slope a. becomes steeper. b. becomes flatter. c. doesn't change because the budget constraint shifts in parallel to the original budget constraint. d. doesn't change because the budget constraint shifts out parallel to the original budget constraint.
The discount rate
A) is determined by markets forces of demand and supply in the market for bank reserves. B) is set by the Board of Governors. C) is determined by investment banks. D) is determined by market forces of demand and supply in the credit market.