Explain how mandatory seat belt laws may reduce the negative externalities of risky behavior
What will be an ideal response?
Mandatory seat belt laws are designed to reduce the severity of injuries resulting from traffic accidents. By requiring all passengers in a vehicle to wear seat belts, the chances of serious injury are smaller, even when other drivers engage in risky behavior like speeding or reckless driving.
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Insurance companies
A) pool risk and thereby lower people's utility. B) can earn a profit only if people are risk neutral. C) can increase risk averse people's utility. D) try to shift their customers' utility of wealth curves downward.
If a firm did not have any fixed costs at all, then the ATC curve would be
a. the same as the AVC curve. b. horizontal. c. positive and linear. d. none of these.
The classical labor supply function is shown as
a. Ns = g(P/W). b. Ns = g(W/P). c. Ns = t(W/Pe). d. Ns = t(Pe/W).
The owners of a firm are earning economic profit if
a. return on their capital is lower than the opportunity cost of employing that capital in their industry. b. their total revenues exceed the monetary payments to labor and other resources in the long run after all plant size adjustments are made. c. price exceeds average variable costs at the shutdown point. d. they are earning a return on their capital that is higher than what can generally be earned in other markets.