Andrew has the utility of wealth curve shown in the above figure. He owns an SUV worth $30,000 and that is his only wealth. There is a 10 percent chance that he will have an accident within a year. If he does have an accident, his SUV is worthless
Suppose all SUV owners are like Andrew. An insurance company agrees to pay each person who has an accident the full value of his/her SUV. The company's operating expenses are $1,500. What is the minimum insurance premium that the company is willing to accept? A) $1,500 per year
B) $4,500 per year
C) $3,000 per year
D) $6,000 per year
B
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Going skiing will cost Adam $80 a day. He also loses $40 per day in wages because he has to take time off from work. Adam still decides to go skiing
A) His decision is rational if Adam's marginal benefit of spending a day skiing is greater than his marginal cost. B) The $80 price of skiing is not an opportunity cost and so did not affect Adam's decision. C) He loses a total of $120 per day, so his decision is irrational. D) Adam's lost $40 per day in wages is not an opportunity cost and so did not affect his decision. E) Adam is definitely making a decision that is in the social interest.
Money market mutual fund shares function like
A) checking accounts that pay interest. B) bonds. C) stocks. D) currency.
The United States ran a trade deficit in 40 of the 45 years in which period?
a. 1800–1845 b. 1831–1875 c. 1845–1899 d. 1856–1900
If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________.
a. excess supply b. excess demand c. ceteris paribus d. a price ceiling