Moral hazard
a. makes a free market in insurance hard to operate.
b. is the tendency of insurance to encourage the source of risk.
c. tends to make the cost of insurance higher and the market for insurance less efficient.
d. All of the above are correct.
d
Economics
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If a firm is earning just enough to cover all its economic profits does that mean it's not making a profit?
What will be an ideal response?
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Suppose the economy is at full employment and firms become more pessimistic about the future profitability of new investment. Which of the following will happen in the short run?
A) The aggregate demand curve will shift to the right. B) Unemployment will rise. C) Prices will rise. D) Output will rise.
Economics