Refer to Figure 2-4. Consider the following events:
(a) an increase in the unemployment rate
(b) general technological advancement
(c) decrease in consumer wealth Which of the events listed above could cause a movement from X to V?
a. a only
b. a and b only
c. b and c only
d. a, b, and c
Answer: a. a only
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Which of the following actions best illustrates adverse selection?
a. A person purposely chooses bonds of corporations with high default risk because of the high returns. b. A person dislikes losing $400 more than he likes winning $400. c. After obtaining automobile insurance a person drives less carefully than before. d. A person intending to take up dangerous hobbies applies for life insurance.
Marginal revenue is the:
A. change in product price associated with the sale of one more unit of output. B. change in average revenue associated with the sale of one more unit of output. C. difference between product price and average total cost. D. change in total revenue associated with the sale of one more unit of output.