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Mortal hazard problem and adverse selection problem
Place an 'M' beside the items in the following list that describe a mortal hazard problem and an 'A' beside those that describe an adverse selection problem:
a. A person with a terminally illness buys several life insurance policies through the email.b. A person drives carelessly because he or she has automobile insurance.c. A person who intends to "torch" his warehouse takes out large fire insurance policy.d. A professional athlete who has a guaranteed contract fails to stay in shape during the off-season.e. A woman who anticipates having a large family takes a job with a firm that offers exceptional child care benefits.
Suppose the price of food increases from Px1to Px2. On a clearly labelled graph, illustrate the income and substitution effects of the price change on the consumption of food.
Assume the problems of maximizing solves the first problem if and only if it also solves the second problem.
Explain by how much should domestic automakers raise the price of automobiles if they wish to increase sales by 5 percent next year?
An open economy has the following pattern of income and domestic expenditure: For each of the three years, evaluate the balance of trade facing the economy.
Elucidate what level of visits will the maximum profit position be. Elucidate what are the profits at this level.
Describe the effects a 15 percent price increase would have on the demand for the product.
If the MPC = 0.94, C 0 = 45, I = 150, G = 125, T = 75, X = 50 & IM = 60: Write out the consumption function. Compute the simple multiplier.
Assume the new leadership in Congress decides to repeal some of the tax breaks granted to large businesses throughout the past several years. What impact will the repeal have on the exporting of jobs to foreign countries? describe by using isoquant ..
Explain the most important economic, political or social issue facing the United States.
Two articles Fed Official Expects Growth also Are Inflation Expectations Rising from the Ashes. Illustrate what exactly is the Federal Reserve.
Explain why should you, as a future employe, be concerned about the downward trend in labor productivity increases that have been observed since the early 1970s.
As the Federal Reserve utilize its special powers to buy and sell government bonds, how does buying and selling government bonds affect the supply of money in the economy.
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