Behavioral economists want to:
A. maintain supply and demand models.
B. eliminate traditional economic building blocks.
C. eliminate the supply and demand model.
D. eliminate heuristic models.
Answer: A
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An example of moral hazard is
a. people drive less carefully in icy conditions with antilock brakes than without b. people drive as safely with more airbags as without c. football players avoid 'spearing' with their heads even with safer helmets d. people read the medicine warnings as carefully when self-medicating as with a doctor's prescription
If a 10-year Treasury bond pays 3.1% and a 10-year corporate bond pays 7.4%, what is the interest rate spread on this particular corporate bond?
a. 4.3% b. 7.4% c. 10.5% d. 22.9%
Which of the following is not a necessary condition for the Coase theorem?
a. Property rights are clearly defined. b. The costs of bargaining are sufficiently low. c. The government intervenes to internalize the externality. d. There are only a few parties involved.
_______________is a type of cost-benefit decision making that compares the extra benefits to the extra cost of an action.
Fill in the blank(s) with the appropriate word(s).