In the market for automobile insurance, moral hazard implies that
A) those who are insured might take greater risks.
B) those who are uninsured might take greater risks.
C) insured and uninsured alike will take greater risks.
D) drivers with greater risks are more likely to buy insurance.
A
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Suppose the supply of apartments in Minneapolis is perfectly elastic. The effect of a $100 per month tax on all apartments is that
A) landlords pay none of the tax and there is a surplus of apartments. B) landlords pay all of the tax and suffer all of the deadweight loss. C) landlords pay all of the tax and no changes take place in the quantity of apartments supplied. D) renters pay all of the tax. E) the government collects no tax revenue because the supply is perfectly elastic.
You are more sensitive to a change in price if you
A) spend a lot of your income on the good. B) spend a small percentage of your income on the good. C) buy very little of the good. D) do not buy the good regularly. E) have a very inelastic demand for the good.