Which of the four categories of resources used in production refers to the physical and mental effort expended by people?
a. labor
b. land
c. capital
d. entrepreneurial ability
a. labor
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In ____ 2-person, nonzero-sum games there is no communication between the participants and no way to enforce agreements
a. noncooperative b. cooperative c. a and b d. none of the above
Two firms, A and B, each currently dump 50 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government will sell 40 pollution permits for $75 each. It costs Firm A $100 for each ton of pollution that it eliminates before it reaches the river, and it costs
Firm B $50 for each ton of pollution that it eliminates before it reaches the river. Neither firm produces any less output, but they both conform to the law. It is likely that between the cost of permits and the cost of additional pollution abatement, a. Firm B will spend $3,500. b. Firm A will spend $4,000. c. Firm A will spend $4,500. d. Firm B will spend $3,000.
For a mortgage lender that makes mortgage loans to borrowers, which one of the following would be an example of moral hazard?
a. After the loan has been made, individuals become careless with their finances b. Individuals most likely to default are the ones most likely to apply for the loan c. Lenders performing a credit check on all potential borrowers d. None of the above
A fall in the average income of a consumer, say during a recession, is represented by:
a. an upward movement along the demand curve for a good consumed by the consumer. b. a downward movement along the demand curve for a good consumed by the consumer. c. a shift of the demand curve for a good consumed by the consumer. d. a rotation of the demand curve for a good consumed by the consumer. e. an inward shift of the demand curve for an inferior good consumed by the consumer.