People buy insurance do protect themselves from moral hazard. True or false? Explain.
What will be an ideal response?
Ques. 2Starbucks sells coffee in both New York City and in rural upstate New York. The price of coffee is higher in New York City.
This fact means that the value of marginal product of land is ________ in New York City and so Starbucks is willing to pay a ________ rent in New York City. A) lower; lower
B) higher; lower
C) lower; higher
D) higher; higher
Ques. 3The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if the price of a steak dinner fell?
A) It would rotate inward around the vertical intercept, 10 lobster dinners.
B) It would rotate outward around the vertical intercept, 10 lobster dinners.
C) It would rotate inward around the horizontal intercept, 20 steak dinners.
D) It would rotate outward around the horizontal intercept, 20 steak dinners.
Ques. 4If the average total cost of producing 20 sweaters an hour falls when the firm doubles all its inputs, then the
A) short-run average total cost curve shifts upward because all inputs have increased.
B) firm moves along its short-run average total cost curve.
C) firm experiences economies of scale.
D) long-run average cost curve shifts downward.
Ques. 5A government subsidy for a good
A) is similar to a tax insofar as it decreases the production of the good being subsidized.
B) increases production of the subsidized goods.
C) punishes those who consume or produce the subsidized good.
D) has no effect on the quantity of the good produced.
Ques. 6Unemployment compensation is an example of
A) a subsidized service.
B) a regressive income program.
C) a Social Security benefit.
D) an income maintenance program.
Ques. 7In the above figure, which curve depicts the supply of land for Chicago's Magnificent Mile?
A) curve F
B) curve G
C) curve H
D) curve I
Ques. 8What is a normal profit?
What will be an ideal response?
Ques. 9The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if the price of a lobster dinner increased?
A) It would rotate inward around the vertical intercept, 10 lobster dinners.
B) It would rotate outward around the vertical intercept, 10 lobster dinners.
C) It would rotate inward around the horizontal intercept, 20 steak dinners.
D) It would rotate outward around the horizontal intercept, 20 steak dinners.
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