Suppose that a vaccine is developed for a highly contagious strain of flu. The likelihood that anyone will get this flu decreases as more people receive the vaccine. One of the demand curves below represents the private demand for the vaccine and the other represents the social demand for the vaccine.
At the private market equilibrium, the deadweight loss is ________ per day.
A. $0
B. $500
C. $250
D. $125
Answer: C
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The substitution effect of a wage increase
a. probably leads most workers to want to work more. b. certainly leads all workers to want to work more. c. probably leads most workers to want to work less. d. certainly leads most firms to want to employ more workers.
Adverse selection may lead to
a. owners of used cars choosing to keep them rather than sell them at the low price that skeptical buyers are willing to pay. b. wages being stuck above the level that balances supply and demand, resulting in unemployment. c. buyers with low risk choosing to remain uninsured because the policies they are offered fail to reflect their true characteristics. d. All of the above are correct.
When prices at Wendy's rise, more consumers buy their meals at McDonald's and fewer consumers buy their meals at Wendy's. This is an example of
A) commodity substitution. B) outlet substitution. C) consumers' action to boycott Wendy's. D) both A and B. E) both B and C.
Stephanie has decided to eat lunch between classes. She has ranked her choices, from highest to lowest as, (1 ) turkey sandwich, (2 ) tuna sandwich, (3 ) slice of cheese pizza, (4 ) cheeseburger. The opportunity cost of the eating turkey sandwich is
A) the combined value of the tuna sandwich, slice of cheese pizza and cheeseburger. B) the value of tuna sandwich, the next best choice. C) the value of the cheeseburger. D) zero since she has satisfied a want.