Moral hazard is
A. The abuse of the welfare system by some nonneedy recipients.
B. The involvement in illegal activity.
C. An incentive to engage in undesirable behavior.
D. The risk involved in accepting welfare.
Answer: C
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A recent flood in the Midwest has destroyed much of the farmland that lies in fertile regions near the rivers. Describe the effect of the flood on the marginal productivity of land, labor, and capital. How would the flood affect the price of inputs? Provide some examples
In order to maintain high prices, a cartel must get its members to
A. develop new sources. B. leave production unchanged. C. reduce production. D. increase production.
Answer the following questions true (T) or false (F)
1. If a country produces only two goods, then it is not possible to have a comparative advantage in the production of both those goods. 2. In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it can still benefit by trading with the other country. 3. If the opportunity cost of producing more of one good increases as more of that good is produced, then the production method is inefficient.
If a restaurant like Buffalo Wild Wings has higher costs than a comparable Hooters restaurant, the only way it can have higher profits is if
A) the demand for its food is higher than the demand for food at Hooters. B) it sells the quantity associated with its minimum average total cost. C) it has more locations than Hooters. D) its marginal revenue is lower than the marginal revenue of Hooters.