A farmer lives on a flat plain next to a river. In addition to the farm, which is worth $F, the farmer owns financial assets worth $A. The river bursts its banks and floods the plain with probability P, destroying the farm
If the farmer is risk averse, then the willingness to pay for flood insurance unambiguously falls when A) F is higher, and A is lower.
B) P is lower, and F is higher.
C) F & A are higher.
D) P is lower, and A is lower.
E) A is higher, and F is lower.
E
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A horizontal long-run industry supply curve occurs under conditions of
a. economies of scale b. diseconomies of scale c. monopoly d. increasing costs e. constant costs
Which of the following will not cause a change in demand for crackers?
a. a change in consumers' income b. a change in the price of crackers c. a change in the price of cheese d. a change in the number of cracker-eaters e. a change in consumers' tastes for crackers
As the number of firms in an oligopoly increases, the magnitude of the
a. output effect increases. b. output effect decreases. c. price effect increases. d. price effect decreases.
The CPI differs from the GDP deflator in that
a. the CPI is an inflation index, while the GDP deflator is a price index. b. substitution bias is not a problem with the CPI, but it is a problem with the GDP deflator. c. increases in the prices of foreign produced goods that are sold to U.S. consumers show up in the GDP deflator but not in the CPI. d. increases in the prices of domestically produced goods that are sold to the U.S. government show up in the GDP deflator but not in the CPI.