If a consumer must spend her entire income on some combination of two commodities and chooses to spend it all on just one of the commodities then:
A) the other commodity is an economic bad.
B) the other commodity must have zero marginal utility.
C) the other commodity generates less utility per dollar spent on the good.
D) the two commodities must be perfect substitutes.
C
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The figure above shows Clara's demand for CDs. At a price of $20 for a CD, the value of Clara's total consumer surplus for all the CDs she buys is
A) $40. B) $30. C) $20. D) $4.
Health insurance is subject to
a. Both asymmetric information problems and moral hazard problems b. Neither asymmetric information problems nor moral hazard problems c. Asymmetric information problems but not moral hazard problems d. moral hazard problems but not asymmetric information problems
The most likely source of investment funds for a proprietorship is
A) sales of stocks. B) sales of bonds. C) loans from banks. D) the personal funds of the owner.
Economists generally oppose direct regulation because:
A. it is generally unfair. B. it is unlikely to achieve the desired end as efficiently as possible. C. it assumes that people behave rationally. D. it does not assume that people behave rationally.