When the federal government insures large financial institutions against losses, the problem of _____ arises.
a. paradox of thrift.
b. fallacy of composition.
c. moral hazard.
d. distribution.
c. moral hazard.
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Privatization results in
a. a return to economic liberalism. b. a reduction in government economic functions. c. guaranteed improvement in consumer service. d. diminishing returns.
Which of the following determines the maximum price a firm may charge for a particular quantity of output?
a. the firm's supply curve b. opportunity costs c. explicit and implicit costs of production d. the minimum point of the average total cost curve e. the demand curve facing the firm
Two inputs ______ when they must be combined in a fixed ratio.
A. are perfect substitutes B. are perfect complements C. represent Cobb-Douglas technology D. are fixed inputs
The formal study of economics began when Adam Smith (1723-1790) published his famous book The Wealth of Nations in 1776. In the first chapter of The Wealth of Nations, Smith introduces the idea of the division of labor. Define "division of labor" and illustrate with an example.
What will be an ideal response?