Linus has just watched two hours of TV. We can say:
A. his second hour of watching TV likely reduced his total utility.
B. his second hour of watching TV likely added less to his total utility than did the first.
C. if he watches a third hour it will likely increase his total utility by at least as much as the second.
D. if he watches a third hour it will likely decrease his total utility.
Answer: B
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Blood tests administered to applicants for medical insurance are an example of an attempt by insurance companies to deal with the problem of
A) moral hazard. B) the drug abuse problems currently plaguing the country. C) adverse selection. D) failure of policyholders to keep paying their premiums.
A corrective tax can improve upon the misallocation of resources resulting from an externality _____
a. only if the externality is positive b. only if it is easy to quantify the external damage c. transactions costs are low d. transactions costs are zero
The more substitutes there are for a monopolist's product
A) the less elastic is the demand curve. B) the more elastic is the demand curve. C) the steeper is the demand curve. D) the more positively sloped the demand curve becomes.
Deflation:
a. under the current trends will cause consumers' purchasing power to shrink. b. has been persistent in the U.S. economy since the Great Depression. c. was prevalent during the oil shocks of the 1970s. d. none of these choices.