61.When a good commodity driven out of the market by : 1413857
61.When a good commodity is driven out of the market by a bad commodity it is called:
e.tragedy of commons.
62.A market in which adverse selection may not occur is:
a.the market for pre-owned residential apartments.
b.the lemons market.
c.the market for new sports utility vehicles.
d.the capital market.
e.the market for health insurance.
63._____ occurs when unobservable qualities are valued incorrectly because of a lack of information.
64.Which of the following may be explained by adverse selection?
a.When banks raise the interest rate on loans, high-risk applicants leave the market.
b.When health insurance companies decrease insurance charges but increase deductibles, less healthy people are more willing to purchase insurance.
c.As the cost of insurance rises, low-risk applicants reduce their coverage.
d.Products are sold at prices that reflect their true value.
e.Loan companies do not require down payments.
65.James insured his car with a renowned insurance company that checked his driving skills and verified his accident records before insuring his car. After paying two premiums for this insurance, James took to drinking and driving. This action of James is likely to create:
a.an economic loss.
b.a positive externality.
c.an economic bad.
d.a moral hazard.
e.diseconomies of scale.
66.Moral hazard is the term used to describe the situation in which:
a.a consumer may buy a low-quality product.
b.consumers receive a lower price because of a mistake on the part of the clerk.
c.a consumer is being compensated for a defective product.
d.people may change their behavior after they have signed a contract or agreed to a specified behavior.
e.people want to change their behavior after they have signed a contract or agreed to a specified behavior but are unable to do so.
67.When each additional resource adds increasing amounts of additional output, it refers to a situation of:
b.economies of scale.
c.diseconomies of scale.
68.When a firm increases its short-run supplies only by hiring more labor, other inputs remaining unchanged, eventually:
a.output will increase at a decreasing rate.
b.the total cost of producing the good will decline.
c.the marginal productivity of the fixed inputs will decline.
d.the average cost of producing the good will decline.
e.the productivity of laborers will increase.
69.Why does network externality arise?
a.Each additional unit of a good sold reduces the value of the previously sold units.
b.As more and more units of a good are produced, the average cost declines.
c.Consumption of a good by one user does not affect the consumption of subsequent users.
d.The firms enjoy economies of scale in the long run.
e.Each additional unit of the good sold increases the value of the previously sold units.
70.If the value of a network to a single user is $1 for each other user on the network, then a network of size 100 has a value of: