Hotelling's model has been used to describe differentiation in the political "market." Suppose that 100 voters are evenly distributed between the extreme left and the extreme right on the political spectrum, and that all voters vote, and they always vote for the candidate closest to them on this spectrum. The numbers on this spectrum represent the number of voters lying to the left of the number. So, at the midpoint, fifty voters lie to the left and fifty to the right. At the extreme right end, all 100 voters lie to the left. 
width="553" />If Candidate Y is running against Candidate Z:
A. Both candidates will have an incentive to move to the left.
B. Both candidates will have an incentive to move toward each other's position.
C. Candidate Y will have an incentive to move to the left, and Candidate Z will have an incentive to move to the right.
D. Neither candidate has any incentive to move.
Answer: B
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The monopolist that maximizes profit
A) imposes a cost on society because the selling price is above marginal cost. B) imposes a cost on society because the selling price is equal to marginal cost. C) does not impose a cost on society because the selling price is above marginal cost. D) does not impose a cost on society because price is equal to marginal cost.
Which of the following is an example of a principal/agent relationship?
a. Banks lending money to start-up companies. b. An investment banker investing the client's money into different securities. c. Advance booking for a car after watching its promos at a car show. d. Investing your money in fixed-return deposits and government securities.
Economists generally use GDP to measure a nation's total output because it is
a. equal to the sales value of all transactions conducted during a period and thus can be easily calculated. b. the best available measure of the true costs of producing consumer goods. c. unaffected by changes in the prices of products over time. d. a relatively reliable measure of the value of all final product goods and services produced during a specific time period.
The ancient Greek philosopher, Plato, concluded that in an ideal society the income of the richest person
a. would be equal to the income of the poorest person. b. would be no more than four times the income of the poorest person. c. would be reflective of the effort put forth by that person. d. would be taxed at a higher rate than the income of the poorest person.