If Sally drives less carefully after buying auto insurance, she illustrates
A) adverse selection.
B) negative selection.
C) moral hazard.
D) lemon hazard.
C
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Which of the following will NOT shift the aggregate demand curve to the right?
A) a decline in the price level B) an increase in government expenditures C) an increase in investment D) an increase in the money supply
Money serves the following function(s):
(a) Medium of exchange (b) Store of value (c) Unit of account (d) All of the above
In a perfectly competitive market, _____
a. short-run profits attract other firms to the market b. there are significant barriers to entry c. firms sell highly differentiated products d. firms are price makers
Suppose that a powerplant is given a permit to pollute 10 tons of carbon into the atmosphere. As the powerplant operates, it can generate $200 of profit selling electricity per ton of carbon that it sends into the atmosphere. If the price of the carbon permit is $100 per ton, then:
A. the powerplant is better off shutting down and selling its permit. B. the powerplant is better off buying more permits and selling more electricity. C. the powerplant is better off selling electricity and using the permits to pollute 10 tons of carbon. D. the powerplant is better off shutting down and buying more permits.