Which of the following statements is false?
A) Asymmetric information can exist both before and after a transaction.
B) Moral hazard occurs when one party to a transaction changes his or her behavior in a way that is hidden from and costly to the other party.
C) Adverse selection has the potential to eliminate some markets.
D) none of the above
D
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Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to LCD televisions)?
A) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. B) The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players. C) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase. D) The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.
The social security tax is called FICA, which stands for:
a. Federal Investment Corporation of America. b. Federal Income Contributions to Americans. c. Funding from Individuals and Corporations in America. d. Federal Insurance Contributions Act.
The Get-There-Safe Bus company incurs an average cost of $45 for each passenger it carries on its trip from Atlanta to Chattanooga. In advance of a particular trip, four seats remain unsold. The bus company could increase its profit only if it
a. charged any ticket price above $0 for the four remaining seats. b. charged at least $11.25 for each of the four remaining seats. c. charged at least $45 for each of the four remaining seats. d. paid four people to occupy the four remaining seats.
When the federal government takes action to change taxes and spending to stimulate the economy, such policy is:
A. automatic. B. passive. C. discretionary. D. nondiscretionary.