A pure monopolist is selling 10 units at a price of $10. If the marginal revenue of the 11th unit is $1, then the price of the 11th unit is
A. $9.18.
B. $10.
C. greater than $11.
D. $11.
Answer: A
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Adverse selection in the market for health insurance arises because
A) buyers of insurance know more than insurance companies about the likelihood of an illness for which buyers want insurance. B) the federal government intervenes in insurance markets by controlling prices and reimbursement policies. C) many insurance companies care more about profits than they do about providing services for their customers in the event of illness. D) insurance companies are not allowed to charge premiums that are high enough to insure against "worst-case" illness.
Coordination of economic policies among nations is a prisoner's ________ because all countries will be better off if they ________
A) dilemma; cooperate B) conundrum; cooperate C) sentence; compete D) screed; compete E) quandary; collude
Under the modern system of fractional reserve banking, banks
a. keep cash reserves equal to only a fraction of their deposit liabilities. b. loan out their excess reserves at interest, which is the key to their profitability. c. are always potentially vulnerable to runs. d. All of the above are correct.
The rapid development of Internet technologies during the 1990s allowed businesses to produce goods and services more cheaply than before and also gave rise to completely new services. We would show this change in the AD/AS model by moving the short-run aggregate:
A. supply curve up with little change in aggregate demand. B. supply curve down (to the right) with little change in aggregate demand. C. demand curve right with little change in short-run aggregate supply. D. demand curve left with little change in short-run aggregate supply.