If insurance companies are required to offer coverage to all interested people, it is said that premiums for each person will be increased. Assume that the insurance market is perfectly competitive. What is the major reason for raising the premium?
A. The insurance companies take advantage of the increased demand and collude.
B. Less healthy people join the pool of insured and hence increase the risk and the premium.
C. Medical services are more expensive because of increased demand.
D. None of the statements is correct.
Answer: B
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A variable is standardized in the sample:
A. by multiplying by its mean. B. by subtracting off its mean and multiplying by its standard deviation. C. by subtracting off its mean and dividing by its standard deviation. D. by multiplying by its standard deviation.
Consumer Price Index (CPI)
What will be an ideal response?
If a profit-maximizing firm finds that, at its current level of production, MR < MC, it will
A) decrease output. B) increase output. C) shut down. D) operate at a loss.
Assume Cathy's Cupcake Company operates in a perfectly competitive market producing 10,000 cupcakes per day. At this output level, price exceeds this firm?s marginal and average variable costs. To maximize profits, Cathy's should
A. make no adjustments as they are already maximizing their profits. B. increase their output. C. stop producing since it is earning a loss. D. decrease their output.