"The resources now going into the War on Terrorism and into improved airport security would save more lives if they were invested in medical research." This statement most clearly reflects which of the following?
a. The best test of an economic theory is its ability to predict.
b. There is no such thing as a free lunch--the use of scarce resources always has an opportunity cost.
c. selfishness; if people were not selfish, we could have more of everything.
d. The value of goods can be determined objectively.
B
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A monopoly firm is the only seller of a good or service that
A) does not need to be advertised. B) has no close complements. C) does not have a close substitute. D) has a perfectly elastic demand.
The publisher that paid Arthur Arthur, the popular novelist, a $2 million advance on his recent novel, which sold only 42 copies, fell victim to
a. moral hazard b. an authority relation c. the winner's curse d. the principal-agent problem e. adverse selection
For the courts, being too big a firm in an industry can be sufficient grounds, using the per se criterion, to charge the firm with violating antitrust laws
Indicate whether the statement is true or false
Hotelling's model has been used to describe differentiation in the political "market." Suppose that 100 voters are evenly distributed between the extreme left and the extreme right on the political spectrum, and that all voters vote, and they always vote for the candidate closest to them on this spectrum. The numbers on this spectrum represent the number of voters lying to the left of the number. So, at the midpoint, fifty voters lie to the left and fifty to the right.
If Candidate Y is running against Candidate Z:
A. Both candidates will have an incentive to move toward each other's position. B. Candidate Y will have an incentive to move to the left, and Candidate Z will have an incentive to move to the right. C. Both candidates will have an incentive to move to the left. D. Neither candidate has any incentive to move.