Assume that an insurance company sets a single price for insurance equal to the total medical bills paid by the insurance company divided by the number of its customers. If it pays medical bills of $5,000 for half of its customers and $9,000 for the other half of its customers, the price of insurance will be:
A. $5,000.
B. $6,000.
C. $7,000.
D. $9,000.
Answer: C
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The IS-MP model assumes the Fed targets ________, and the IS-LM model assumes the Fed targets the ________
A) the expected inflation rate; the unemployment rate B) short-term nominal interest rates; the money supply C) the output gap; the long-term real interest rate D) short-term real interest rates; the expected inflation rate
Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound and bananas cost $1 per pound. The marginal utility is 30 for the last pound of mangos purchased and 10 for the last pound of bananas
To maximize his utility, Robinson should buy A) more mangos and fewer bananas. B) more bananas and fewer mangos. C) the present combination of goods. D) only mangos.
A perfectly competitive firm has a random marginal cost with a 20 percent chance of a high marginal cost of $20 and an 80 percent chance of a low marginal cost of $5. What is the firm's expected marginal cost?
A) $7 B) $8 C) $10 D) $12
State two examples of government-created monopolies