As it applies to insurance, the moral hazard problem is the tendency for:
A. those most likely to collect on insurance to buy it.
B. those who buy insurance to take less precaution in avoiding the insured risk.
C. sellers to price discriminate.
D. sellers to restrict output and charge high prices.
Answer: B
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Along the aggregate supply curve, the quantity of real GDP supplied increases when the price level rises because
A) the real wage rate rises. B) the demand for the goods and services increases. C) the real wage rate falls. D) the real wage rate and profits both fall. E) profits decrease.
In monopolistic competition, the products of different sellers are
A) identical. B) similar but slightly different. C) unique without any close or perfect substitutes. D) perfect substitutes. E) either identical or differentiated.
Acquiring a firm that sells a substitute good would make the demand curve for your original product
a. More inelastic b. More elastic c. Unchanged d. None of the above
Figure 4.3 illustrates the demand for tacos. A decrease in the demand for tacos is represented by the movement from
A) point a to point b. B) point c to point b. C) D2 to D1. D) D0 to D1.