Who is more likely to drive carelessly, Camila in her 1980 Ford with bad brakes or Samantha, who has a 2005 BMW with all the most recent safety options?
On the surface, we might conclude that Samantha will be more careful since she appears to have more to lose (a higher priced car), but insurance likely will cover any monetary loss. Most people value their life and health more than material possessions; because of this, we expect Camila to be more careful due to her unsafe car. Samantha can afford to take more risks since her car is in better condition and has the latest safety features.
You might also like to view...
If a seller charges a buyer the exact price the buyer is willing to pay, then the buyer would
A) not buy the good. B) receive the maximum consumer surplus. C) receive no benefit from the good. D) receive no consumer surplus from that unit of the good. E) suffer a deadweight loss from buying the good.
An increase in total utility would be depicted using indifference curve analysis as: a. a movement down along an indifference curve to the southeast
b. a movement up along an indifference curve to the northwest. c. a movement from one indifference curve to another located to the northeast. d. a movement from one indifference curve to another located to the southwest.
Product differentiation in monopolistically competitive markets ensures that, for profit-maximizing firms,
a. marginal revenue will equal average total cost. b. price will exceed marginal cost. c. marginal cost will exceed average revenue. d. average variable cost will be declining.
Related to the Economics in Practice on p. 550: In the simple "Keynesian" view, the economy has a
A. set price level. B. clearly defined capacity. C. horizontal aggregate demand curve. D. downward sloping aggregate supply curve.