Moral hazard is a problem that arises:
A. before the parties have entered into an agreement.
B. after the parties have voluntarily entered into an agreement.
C. either before or after the parties have entered into an agreement.
D. rarely in any market
B. after the parties have voluntarily entered into an agreement.
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The increase in total revenue due to increasing the amount of labor employed by one unit is called the
A) Marginal Product. B) Marginal Revenue Product. C) Average Revenue Product. D) Total Revenue Product.
Suppose lawn mowers are part of the market basket used to compute the CPI. Suppose also that the quality of lawn mowers deteriorates while the price of lawn mowers stays the same. If the Bureau of Labor Statistics is able to precisely adjust the CPI for the improvement in quality, then, other things equal,
a. the CPI will rise. b. the CPI will fall. c. the CPI will stay the same. d. lawn mowers will no longer be included in the market basket.
Quantity DemandedPriceQuantity Supplied52$5073624562724051823542923033In the above market, economists would call a government-set maximum price of $40 a:
A. price floor. B. fair price. C. equilibrium price. D. price ceiling.
The major similarity between monopolistic competition and perfect competition is
A) the shape of the demand curve. B) that both assume many buyers and sellers. C) price equals marginal revenue in each. D) both assume products are differentiated.