Moral hazard occurs when the parties on once side of the market, who have information not known to others, self select in a way that adversely affects the parties on the other side of the market
Indicate whether the statement is true or false
False
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Sharon consumes 10 chocolates when the price of one chocolate is $2. If her arc elasticity of demand for chocolates is -1, she consumes ________ chocolates when the price increases to $4
A) 5 B) 6 C) 8 D) 9
To equalize traffic on transportation routes, a pricing arrangement called “peak, off-peak pricing” would most likely be proposed by
A. economists. B. politicians. C. regulators. D. the general public.
The supply-and-demand model may not be appropriate in markets with large transaction costs
Indicate whether the statement is true or false
Which of the following statements is CORRECT?
A) When demand increases, both the price and the quantity increase. B) When demand decreases, the price rises and the quantity decreases. C) When supply increases, the quantity decreases and the price rises. D) When supply decreases, both the price and the quantity decrease.