Reaching an efficient bargain is difficult when the
a. externality is large.
b. number of interested parties is large.
c. externality is negative.
d. government becomes involved.
b
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If the Fed wished to decrease inflation, it could
A) increase the reserve requirement or conduct an open market sale. B) increase the reserve requirement or conduct an open market purchase. C) decrease the reserve requirement or conduct an open market sale. D) decrease the reserve requirement or conduct an open market purchase.
Dahlia can earn $60,000 a year working at a relatively safe job, or $65,000 a year working at a riskier job
The probability of death from working at the relatively safe job is 1/5,000, and the probability of death from working at the riskier job is 1/1,000. Using the compensating differential approach and the above information, what is the value of Dahlia's life? A) $2 million B) $2.5 million C) $6.25 million D) $25 million
If you sell your DVD player on eBay, you will be better informed about the quality of the product than any potential buyer. This is called
A) adverse selection. B) asymmetric information. C) moral hazard. D) opportunistic behavior.
Trade between two parties is beneficial because:
a. it ensures that the standard of living in the poorer country matches its trading partner eventually. b. it enables each to consume a bundle of goods that it cannot produced domestically. c. it has an immediate effect on an economy by increasing its production set. d. it allows the economy of both trading partners to grow equally.