Evaluating risk requires that:
A. we consider uncertain costs or benefits of an event or choice.
B. we think about different possible outcomes.
C. we accept that our best guess about future costs and benefits could be wrong.
D. All of these statements are true.
Answer: D
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Congress passed the Freedom to Farm Act in 1996. What was the purpose of this Act?
A) to encourage more people to become farmers B) to phase out the use of price ceilings in agricultural markets C) to phase out price floors and return to a free market in agriculture D) to grant free land to farmers in order to produce crops that were particularly scarce
The demand curve for bonds would be reduced by
A) a decrease in expected returns on other assets. B) an increase in the information costs of bonds relative to other assets. C) an increase in wealth. D) an increase in the liquidity of bonds relative to other assets.
Jose consumes wallets (q1 ) and a composite of other goods (q2 ). The price of wallets is p1 and the price of other goods is p2 = 1
Jose's utility from wallets depends also on his income—with a higher income, he values a wallet more because he has more to put inside it! His utility is given by the equation U(q1,q2 ) = q1Yq2 Derive Jose's demand for wallets.
A shortage exists in the market for corn at the prevailing price. The shortage will be eliminated by a price: a. increase, increasing the supply and decreasing the demand
b. decrease, increasing the supply and decreasing the demand. c. decrease, increasing the quantity supplied and decreasing the quantity demanded. d. increase, increasing the quantity supplied and decreasing the quantity demanded.