Firm A and Firm B are the only two producers of a new solar powered cell. Society will gain the most when both firms decide to:
a. form a cartel
b. merge.
c. differentiate their products.
d. produce at the downward-sloping part of their respective average total cost curves.
c
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Suppose you rent an apartment and are worried about a break-in that results in theft of your property. Suppose your monthly consumption level is currently $4,000 but a break-in would result in you having to finance your purchase of replacement property -- and this would reduce your current consumption to $2,000 per month. There is a 10% chance of a break-in. a. On a graph with "consumption" on the horizontal and "utility" on the vertical axis, illustrate a utility/consumption relationship that is consistent with risk averse tastes. b. On your graph, illustrate the utility in the "good" state, the utility in the "bad" state and the expected utility of facing the gamble. c. Which of these changes when the probability of a break-in increases to 20%?
d. A renter's insurance policy consists of a premium p and a benefit level b. What is (b,p) for full, actuarily fair insurance before and after the increase in risk? e. True or False: You are more likely to buy actuarily fair full insurance after the increase in risk than before. What will be an ideal response?
One of the most important determinants of accelerated economic growth is: a. relaxed property rights
b. an increase in population. c. a high level of savings. d. an increased rate of consumption.
The budget constraint shows that
A) the consumer faces a trade-off in the consumption of goods. B) the consumer can have as many goods as he wants. C) as consumers spend more on one good, they spend more on others. D) total income equals total spending on one good.
Refer to the below graphs. A short-run equilibrium that would produce profits for a monopolistically competitive firm would be represented by graph:
A. A
B. B
C. C
D. D