Eduardo is a 19-year-old male who drives a sports car. He is a very safe, highly skilled driver, and he has never had an accident. He is angry when he learns his auto insurance premium is more than double that of his older sister, who is a terrible driver. Why are their rates so different?
a. Insurance companies want good drivers to leave the market.
b. Insurance companies base premiums on risk categories rather than individual actions.
c. Insurance companies want to keep poor drivers in the market.
d. Insurance companies try to provide coverage to everyone equally regardless of skill.
b. Insurance companies base premiums on risk categories rather than individual actions.
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The demand curve for federal funds is ________.
A. downward-sloping, because higher interest rates encourage commercial banks to borrow federal funds B. upward-sloping, because higher interest rates encourage commercial banks to lend federal funds C. downward-sloping, because higher interest rates discourage commercial banks from borrowing federal funds, but lower rates encourage borrowing D. upward-sloping, because higher interest rates discourage commercial banks from lending federal funds
Price elasticity of demand is defined as
A) the change in price divided by the change in quantity demanded. B) the change in quantity demanded divided by the change in price. C) the percentage change in price divided by the percentage change in quantity demanded. D) the percentage change in quantity demanded divided by the percentage change in price. E) the quantity demanded divided by the price.
All of the following are symptoms of definite and indefinite macroeconomic imbalances EXCEPT
A) large budget deficits. B) an overvalued currency. C) a current account deficit. D) the discovery of emerging markets by financial investors who want to diversify their portfolios. E) inflationary pressures.
Explain why environmentally minded firms in a competitive industry will find it difficult to take environmental action.
What will be an ideal response?