The service a homeowner performs when she mows her yard is not included in GDP because:
A. This is a nonmarket transaction
B. This is a nonproduction activity
C. This is a noninvestment transaction
D. Multiple counting would be involved
Ans: A. This is a nonmarket transaction
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Choose which statement is most correct
A) Real GDP can never exceed potential GDP. B) Real GDP must always equal potential GDP. C) At times, real GDP can exceed potential GDP. D) Nominal GDP can never exceed potential GDP. E) Nominal GDP must always equal potential GDP.
Health insurance markets have a problem with insuring people who are "poor health risks" while many people who are "good health risks" do not buy insurance. This problem is an example of
A) market signaling. B) moral hazard. C) adverse selection. D) asymmetric information.
Anna's Antiques expects to get two bidders for the unique china teacup it sells. Each of the bidders can either have a high-value of $100 or a low-value of $70 with equal probability. If Anna receives $100 from the auction she can infer that
a. Both the bidders were high value bidders b. Both the bidders were low value bidders c. One of the bidders was high value, while the other was low value d. All of the above
Given demand, the price is found where
A) consumer surplus is maximized. B) average costs equal price. C) price equals marginal revenue. D) marginal revenue equals marginal cost.