Moral hazard occurs when contracts are written in such a way that
A) the interests of agent and principal converge.
B) the interests of agent and principal diverge.
C) agents will wish to maximize the principal's utility.
D) production and risk-bearing efficiency are achieved.
B
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Before World War II, the average level of prices in the United States usually
A) fell during wartime and rose during peacetime. B) fell during wartime and fell during peacetime. C) rose during wartime and fell during peacetime. D) rose during wartime and rose during peacetime.
The term ceteris paribus is an economic assumption that means
A) let the buyer beware. B) common sense is reality. C) the detail is in the interrelationship. D) other things being equal.
While a trade-off between inflation and unemployment may exist when people expect no inflation, when they realize inflation is occurring, what happens?
a. The trade-off increases. b. The trade-off decreases. c. The trade-off disappears. d. The trade-off shifts.
When P = $65, the quantity demanded of a good is 80 units, and the quantity supplied of the good is 40 units. For every $10 increase in the price of this good, quantity demanded falls by 10 units and quantity supplied rises by 10 units. The equilibrium price of this good is ___________and the equilibrium quantity of this good is _________ units
A) $55; 30 B) $75; 50 C) $75; 70 D) $85; 50 E) $85; 60