Because of assortative mating, wealth becomes ________ and the distribution of wealth becomes more ________.
A) more concentrated in a small number of families; equal
B) more concentrated in a small number of families; unequal
C) spread out among more families; equal
D) spread out among more families; unequal
Ques. 2Questions about employment history on a loan application are used to prevent
A) moral hazard.
B) adverse selection.
C) market signaling.
D) risk aversion.
Ques. 3In the above figure, Brendan originally consumes at point A. If his income rises and both compact discs and haircuts are normal goods then he will begin consuming at a point such as
A) F.
B) B.
C) C.
D) D.
Ques. 4Which of the following statements is TRUE?
A) In the long run, the average cost curve is always downward sloping.
B) In the long run, the quantities of all inputs are fixed.
C) In the long run, the firms' fixed costs are greater than its variable costs.
D) In the long run, all costs are variable costs.
Ques. 5The four largest firms in an industry account for the following value of industry sales: 12 percent, 8 percent, 5 percent and 4 percent. Calculate the four-firm concentration ratio. Would this industry be regarded as competitive or concentrated?
What will be an ideal response?
Ques. 6If a lender checks credit reports on individuals before mailing out loan offers, it is most likely trying to avoid
A) moral hazard.
B) moral dilemma.
C) adverse selection.
D) adverse reaction.
Ques. 7Which of the following occurs with both perfectly price discriminating and single-price monopolies?
A) The amount of output is inefficient.
B) All consumer surplus goes to the monopoly.
C) Deadweight loss is created.
D) There is a redistribution of consumer surplus to the monopoly.
Ques. 8Jessica is a young doctor who has just started her own practice. Her previous position paid her 80,000 a year. For office space, she uses a building which she owns and which she has rented in the past for 40,000 a year.
Her total revenue from her new practice is 250,000. She pays 50,000 to other firms for materials and supplies, and she pays 40,000 in wages to her office nurse. Assume that Jessica's building and equipment do not depreciate and that her normal profit is 20,000. a) What is the opportunity cost of all factors of production employed by Jessica? b) What is Jessica's economic profit?
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