Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should
a. sell the ticket because the marginal benefit exceeds the marginal cost.
b. sell the ticket because the marginal benefit exceeds the average cost.
c. not sell the ticket because the marginal benefit is less than the marginal cost.
d. not sell the ticket because the marginal benefit is less than the average cost.
a
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More people started building houses in earthquake-prone regions when the government of Polonia launched an insurance program for houses in this region. This is an example of ________
A) adverse selection B) a positive externality C) moral hazard D) herd behavior
Which of the following would cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true degree of joblessness in the economy?
A) people employed in the underground economy B) unemployed persons who falsely report themselves as actively looking for a job C) retired people who have no intention of returning to work D) people with part-time jobs who would prefer to be working full time
Banks will hold additional excess reserves when
a. loans to customers look safe and interest rates are high. b. they anticipate a bank audit. c. loans to customers look risky and interest rates are low. d. the economy is booming and there is a large demand for loans.
Randomized controlled trials cannot:
A. provide strong support that a program proven effective in one place can be duplicated in another or that its effectiveness would be maintained over time. B. evaluate the impact of all programs or policies on development. C. help explain why a particular program succeeded. D. All of these statements are true.