Economist Jack Hirshleifer notes that, "Altruism economizes on the costs of policing and enforcing contracts." Since economics assumes that people act in a self-interested manner, what could he possibly mean?
What will be an ideal response?
Increased trust between contracting parties reduces the level of expected opportunistic behavior and contracting costs. As a result, monitoring costs decline. Thus, more contracts are made, and gains from trade increase.
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If we are in a horizontal region of the money demand curve, expansionary monetary policy has __________ effect on output and expansionary fiscal policy has __________ effect on output
A) no; no B) no; a strong C) a strong; no D) a strong; a strong
A tax that takes a smaller percentage of an individual's income as their income rises is called a _____
a. proportional tax b. progressive tax c. sumptuary tax d. regressive tax
The primary purpose of labor unions is to
A. strike. B. give individuals greater bargaining power with employers. C. change our economic system. D. provide workers with political power.
Relating to the Economics in Practice on page 357: A long-term study of Huntington's disease patients found that individuals who carry the Huntington's disease genetic mutation are up to five times as likely as the general population to buy long-term care insurance. This is an example of ________ in the health insurance market.
A. market signaling B. risk-loving C. adverse selection D. moral hazard