In practice, it is usual to assume that, in explaining the impact of a change in interest rates ________
A) the substitution effects outweigh the income effects
B) the income effect outweighs the substitution effect
C) the income and substitution effects cancel out with one another
D) the income effect increases the severity of the substitution effect
A
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Which of the following is not a rationale for government involvement in health care markets?
a. Government involvement is necessary to prevent the spread of contagious diseases, which are type of externality. b. Government involvement is necessary to provide individuals with information on the quality of health care by regulating drugs and physicians. c. Government involvement is necessary to ensure that physicians do not form illegal cartels to restrict entry into medicine in order to increase profits. d. Government involvement is necessary to ensure that everyone has health insurance and thus can gain access to health care.
Scatterbrain Samantha often forgets to lock her house. This has caused the probability of a burglary to be 30%. If her house gets broken into, she faces a property loss of $10,000, otherwise she gets to keep her $100,000 . If Samantha is offered a full coverage insurance policy for her house at $2000, would she buy the insurance?
a. Yes because she gets to now enjoy her wealth risk-free b. No, because she can take the risk and be better off c. Yes, because she gains on average with the insurance d. Both A&C
A linear total cost function implies that:
a. marginal costs are constant as output increases b. average total costs are continually decreasing as output increases c. a and b d. none of the above
A consumer can be said to have achieved equilibrium with respect to consumption when:
a. the marginal utility of each product consumed is the same. b. the last dollar spent on each product yields the same marginal utility. c. the total utility of each product consumed is at a maximum. d. the marginal utility of each product consumed is at a maximum.