(Consider This) Martha's Milkshake Company buys earthquake insurance from the Stable Ground Insurance Company. Based on this purchase, economists would conclude that:
A. Martha's believes a damaging earthquake is imminent.
B. Stable Ground believes no damaging earthquakes will occur.
C. Martha's has a lower tolerance for earthquake risk than Stable Ground.
D. Martha's has a greater tolerance for earthquake risk than Stable Ground.
Answer: C
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The above table shows the daily production possibilities for a bakery. Currently the bakery bakes 60 pizzas and 180 loaves of bread, that is at alternative C. Using the above table, moving from alternative C to alternative B, what is the opportunity cost of one loaf of bread?
A. 2 pizza pies
B. 1 pizza pie
C. 0.5 pizza pie
D. 30 pizza pie
Assume that at the current market price of $4 per unit of a good, you are willing and able to buy 20 units. Last year at a price of $4 per unit, you would have purchased 30 units. What is most likely to have happened over the last year?
a. Demand has increased b. Demand has decreased c. Supply has increased d. Supply has decreased e. Quantity supplied has decreased
When Ryan has an income of $2,000, he consumes 30 units of good A and 50 units of good B. After Ryan’s income decreases to $1,500, he consumes 23 units of good A and 55 units of good B. Which of the following statements is correct?
a. Good A is a normal good, and good B is an inferior good. b. Both goods A and B are inferior goods. c. Both goods A and B are normal goods. d. Good A is an inferior good, and good B is a normal good.
According to the output effect, a decrease in the wage will decrease production costs, so the price of final goods will decrease and the demand for labor will decrease.
Answer the following statement true (T) or false (F)