In the market for insurance,
A) buyers often have more information than sellers.
B) sellers are protected from lawsuits brought by buyers.
C) demand is perfectly inelastic because, by law, home owners and automobile drivers must have insurance.
D) sellers often have better information than buyers.
A
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Which of the following is a tool of monetary policy?
A. Buying and selling government bonds B. Making loans to banks C. Setting reserve requirements D. All of the above are tools of monetary policy.
Standard economic theory asserts that sunk costs are irrelevant in making economic decisions, yet studies conducted by behavioral economists reveal that sunk costs often affect economic decisions. Which of the following could explain this observation?
A) Even though sunk costs cannot be recovered, it has been incurred and therefore should be treated as part of the product's value. B) People measure the value of a good in terms of its purchase price. C) Sunk costs have a higher opportunity cost than costs that can be recovered. D) If consumers maximize their utility, it makes sense to consider the full purchase price of a product in their consumption decisions.