If Arthur has a comparative advantage in sewing and Susan has a comparative advantage in accounting, then
a. Arthur must have an absolute advantage in sewing
b. Arthur must have an absolute advantage in accounting
c. Susan must have an absolute advantage in sewing
d. we cannot conclude anything about absolute advantage
e. Susan must have an absolute advantage in accounting
D
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When people purchase health insurance and then change their behavior after the purchase because the insurance protects them from loss, the health insurance market is said to face the problem of
A) asymmetric information. B) moral hazard. C) adverse selection. D) the rationality paradox.
In the rational expectations model
a. markets are perfectly competitive and in equilibrium. b. markets may not clear even if wages and prices are otherwise perfectly flexible. c. markets may temporarily be in disequilibrium. d. only anticipated changes in aggregate demand affect output.
For a market to be characterized by monopoly, there must be
A. freedom of entry and exit. B. a single seller. C. indistinguishable products being sold. D. a large number of firms with no one able to influence price.
The line described by the consumption function C = a + bYD will change its slope when
A. Autonomous consumption changes. B. The APS changes. C. Disposable income changes. D. The MPC changes.