If a buyer in an economic transaction has more information than the seller, the buyer benefits at the expense of the seller. This phenomenon is due to
A) moral hazard. B) economically irrational behavior.
C) gains from trade. D) adverse selection.
D
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Money is defined as
A) a by product of a barter economy. B) any financial instrument that is backed by gold. C) anything people generally accept in exchange for goods and services. D) a person's net worth.
Consider an economic model designed to analyze the behavior of business firms. An assumption that the goal of the firms is to maximize profit would be
a. a simplifying assumption b. a critical assumption c. an abstraction from reality d. an unnecessary detail e. irrelevant to the conclusions of the model
When the government both provides a service and covers its costs through taxation,
a. the government has a strong incentive to supply consumers with desired goods at a low cost. b. consumers are in a weak position to either discipline the suppliers or alter the quantity or quality of the service provided. c. the invisible hand will direct decision makers toward the most efficient level of output. d. Consumers have strong incentive to be cost conscious.
The run up in gasoline prices between 1999 and 2007
A. still had them much below their long-term inflation-adjusted average. B. put them about the same as their long-term inflation-adjusted average. C. still had them slightly below their long-term inflation-adjusted average. D. put them much above their long-term inflation-adjusted average.