When what people pay does not necessarily reflect the real value they put on a good, it is likely that the:
A. free rider problem does not exist.
B. good will be undersupplied.
C. good is easily excludable.
D. not a socially desirable good.
B. good will be undersupplied.
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Refer to Scenario 17.3. Moral hazard arises in this situation because once the firm
A) pays the premium that is based on the 0.001 probability, it has no incentive to spend the additional $80 for the fire protection program, so the true probability of loss is no longer 0.001. B) pays the premium that is based on the 0.01 probability, it has no incentive to spend the additional $80 for the fire protection program, so the true probability of loss is no longer 0.01. C) puts the fire protection program in place, it has less incentive to spend $300 for a premium, leaving the firm underinsured. D) puts the fire protection program in place, it has less incentive to spend $6,000 for a premium, leaving the firm underinsured. E) puts the fire protection program in place, it will consider that a substitute for insurance and not be able to deal with the loss from a fire should it occur.
Jason is trying to decide whether to buy a bagel or a muffin for breakfast. The bagel costs $0.50 and has a marginal utility of 5 . The muffin costs $1 and has a marginal utility of 20 . Which should he buy and why?
a. The muffin, because it has a higher marginal utility b. The muffin, because it has a lower marginal utility c. The bagel, because it costs less d. The bagel, because it has a higher marginal utility per dollar e. The muffin, because it has a higher marginal utility per dollar
A good bit of management jargon often simply symbolizes fundamental economic analysis
Indicate whether the statement is true or false
Which one of the following would count as investment in the national income accounts?
What will be an ideal response?