A street vendor sells a replica of a pair of designer shoes to a young woman who believes the shoes are authentic. The street vendor is engaging in
a. both moral hazard and adverse selection.
b. neither moral hazard nor adverse selection.
c. moral hazard, but not adverse selection.
d. adverse selection, but not moral hazard.
d
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In 2008, as the economy moved into a recession,
A) cyclical unemployment increased. B) structural unemployment decreased. C) natural unemployment decreased. D) frictional unemployment was not affected. E) the number of marginally attached workers decreased.
Firms in long-run equilibrium in a perfectly competitive industry will produce at the low points of their average total cost curves because:
a. free entry implies that long-run profits will be zero no matter how much each firm produces. b. firms seek maximum profits and to do so they must choose to produce where average costs are minimized. c. firms maximize profits and free entry implies that maximum profits will be zero. d. firms in the industry desire to operate efficiently.