A bill pending before the Legislature in the tiny island nation of WooHoo would prohibit private companies from selling canoe insurance and make the state the single payer of claims for canoe accidents. Private insurance companies that have made above normal profits have spent large sums of money trying to prevent the legislature from passing this bill into law. This is an example of
A. an externality.
B. government failure.
C. collusion.
D. rent-seeking behavior.
Answer: D
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A supply curve
A) is a curve that shows the relationship between the price of a product and the quantity of the product supplied. B) is the relationship between the supply of a good and the cost of producing the good. C) is a curve that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange. D) is a table that shows the relationship between the price of a product and the quantity of the product supplied.
Which of the following correctly describes the result of a price increase for an inferior good?
A) The substitution effect causes the demand for the good to decrease; the income effect causes the demand for the good to increase. B) Both the substitution effect and the income effect cause the consumer to buy less of the good. C) The substitution effect causes the demand for the good to increase; the income effect causes the demand for the good to decrease. D) The substitution effect causes the consumer to buy less of the good and the income effect causes the consumer to buy more of the good.
If a price floor of $23 were placed in the market in the graph shown:
A. a shortage of 37 would occur.
B. a shortage of 10 would occur.
C. a shortage of 27 would occur.
D. None of these would occur.
Refer to the information provided in Figure 2.5 below to answer the question(s) that follow.
Figure 2.5Refer to Figure 2.5. The economy is currently at Point A. The opportunity cost of moving from Point A to Point B is the
A. 30 LCD televisions that must be forgone to produce 60 additional OLED televisions. B. 90 LCD televisions that must be forgone to produce 20 additional OLED televisions. C. 30 LCD televisions that must be forgone to produce 20 additional OLED televisions. D. 120 LCD televisions that must be forgone to produce 40 additional OLED televisions.