Which of the following best exemplifies the theorizing step in the scientific process?
A. Observing a line of cars outside of a gas station.
B. Suggesting that lower gasoline prices are encouraging consumers to buy more gas.
C. Collecting data on the amount of gasoline sold at different prices.
D. Drawing a graph of the relationship between gasoline prices and the amount of gasoline sold at each price.
B. Suggesting that lower gasoline prices are encouraging consumers to buy more gas.
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An insured person's incentive to behave in ways that raise the probability of a claim is known as:
a. a moral hazard. b. the lemons problem. c. the problem of adverse selection. d. the problem of advantageous selection.
The advertisers' dilemma occurs in markets where advertising slightly increases the firm's sales quantity but:
A. it greatly decreases the sales of its competitors. B. it greatly increases the sales of its competitors. C. has no impact on the sales of its competitors. D. the costs of advertising is immense.
A key aspect of the principal-agent problem is that
A) the principal cannot perfectly monitor the agent's actions. B) the principal can perfectly monitor the agent's actions. C) the output level does not depend on the agent's actions. D) the principal is always risk averse.
Investment happens when:
A. Current income is greater than current spending B. Current consumption is greater than current output C. Resources are devoted toward increasing current output D. Resources are devoted toward increasing future output