What is adverse selection?
A) It refers to the private, self-interested actions people that people pursue, which when taken collectively leads to a loss in economic surplus.
B) It refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off.
C) It refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction.
D) It refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction.
Answer: C
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The theory of monopolistic competition was developed in two separate models by
A) Adam Smith and David Ricardo. B) John Kenneth Galbraith and John Maynard Keynes. C) Edward Chamberlin and Joan Robinson. D) Roger Leroy Miller and Paul Samuelson.
The figure below represents the effects in the labor markets due to migration. Here, the world has been divided into a high-income "North" (left panel) and a low-income "South" (right panel). Dn and Sn are the labor demand and the labor supply curves in North. Ds and (Sr + Smig) are the labor demand and pre-migration labor supply curves in South. Sr is the post-migration labor supply curve in South. The value c is the cost of migrating.
As an effect of the migration, the native employees in North
A. lose welfare given by area a. B. lose welfare given by area (a + b). C. gain welfare given by area (a + b). D. lose welfare given by area (e + f).
A decline in the quantity of real output demanded along the aggregate demand curve is a result of a(n):
A. decrease in the level of income. B. decrease in the price level. C. increase in the price level. D. increase in the level of income.
Which of the following acted as a counterweight to increasing income inequality during 1960 - 1980?
A. An increase in the number of two-earner households B. An increase in the tax rates on carried interests C. A decrease in inheritance tax rates D. A decline of union-represented manufacturing employees