Moral hazard occurs when:
a. Individuals and institutions do not bear the full cost of their own mistakes.
b. General social decay leads to unethical business decisions.
c. The actions of one (or a few) result cause harm to others, when the same would not occur if the actions were by many.
d. General social decay leads to unethical business decisions.
e. All of the above are examples of moral hazard.
.A
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Which of the following statements is FALSE about the demand curve?
A) An increase in demand shifts the demand curve to the left, closer to the price axis. B) When only the price of a good changes, there is movement along the demand curve but no change in demand. C) A change in demand is graphically shown by shifting the entire demand curve. D) When demand decreases, there is a drop in the quantity demanded at each price.
If people attempt to sell bonds because of excess money demand, then the interest rate will:
a. rise. b. fall. c. remain unchanged d. react unpredictably.
Why would irrigated farming not become more profitable if the federal government lowered the price farmers had to pay for irrigation water?
A) Farmers would have to pay more for electricity to pump the water. B) The cost of owning or renting land that could be irrigated would rise. C) The prices of irrigated crops would not rise. D) Water is a marginal cost in farming. E) Water is a sunk cost in farming.
Suppose Hank spends his entire budget buying 2 bagels and 3 cups of coffee each day. Also, suppose the marginal utility of the second bagel is 100 and the marginal utility of the third cup of coffee is 200
Which of the following statements is TRUE? A) Hank is not maximizing his utility. B) Hank will be maximizing his utility as long as the price of a cup of coffee is twice the price of a bagel. C) Hank might be maximizing utility only if the price of a cup of coffee is less than the price of a bagel. D) Hank is not maximizing utility because he is not buying equal amounts of each good.