There was a recent report that burglaries occur much more frequently in homes that are not as well kept as homes that have attractive landscaping and a more lavish appearance. This may seem odd because the value of the contents of the better homes would be worth far more to thieves. If a robber knows that the owners of one of each type of house is gone for the weekend, why would a rational robber break into the less lavish home?
What will be an ideal response?
This is a case of the deterrence principle. Robbers suspect that people who are meticulous with their property most likely also have alarm systems, cameras, and have neighbors that watch out for each other. Thus the risk of being arrested goes up significantly for nice homes and the expected net return from a robbery therefore goes down.
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For a firm with market power, advertising expenditures affect all of the following except which one?
A) total cost B) demand curve C) marginal cost D) marginal revenue
In the long run, diminishing returns would:
A. not exist because no input is held constant. B. not exist because all inputs are held constant. C. still exist at a lesser degree because inputs are allowed to vary. D. exist at a greater degree, because all inputs are allowed to vary.
During a period of unanticipated inflation,
A. Debtors and creditors are both better off because of lower real interest rates. B. Individuals on fixed incomes are better off. C. All individuals are worse off because of the level of uncertainty. D. Debtors are better off and creditors are worse off.
The Fed now targets the federal funds rate rather than the money supply.
Answer the following statement true (T) or false (F)