Refer to Exhibit 2-1. The movement from point A to point B is a movement from
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a productive efficient point to another productive efficient point
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A difference between moral hazard and adverse selection is that
a. moral hazard deals with pre-contractually determined public information b. moral hazard deals with post-contractually determined private information c. adverse selection deals with pre-contractually determined private information d. adverse selection deals with post-contractually determined public information
When there is a positive externality associated with the watering of one's lawn, the free market results in:
a. not enough lawn watering. b. too much lawn watering. c. the socially optimal level of lawn watering. d. people watering each other's lawns. e. government subsidies for lawn watering.
Which of the following is true?
a. Monetary policy influences long-term real interest rates more than short-term interest rates. b. Short-term interest rates are primarily determined by real factors and the expected inflation. c. A shift to a more expansionary monetary policy will tend to raise short-term interest rates. d. A shift to expansionary monetary policy that increases the fear of future inflation will tend to increase long-term interest rates.
When economists speak of a firm's costs, they are usually excluding the opportunity costs
a. True b. False Indicate whether the statement is true or false