Some argue that U.S. workers cannot compete with cheap labor from many developing nations. This
A) is true and is a justification for tariffs to protect domestic jobs.
B) is true and it is has been found that tariffs in these cases can save thousands of jobs and benefit the economy.
C) is true but the benefits of free trade are still such that tariffs should not be placed on these industries.
D) is not true, as evidenced by the fact that the United States carries on a lot of trade with countries that have lower wages.
D
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Mike has the utility of wealth curve shown in the figure above. He owns a car worth $20,000, and that is his only wealth. There is a 10 percent chance that Mike will have an accident within a year. If he does have an accident, his car is worthless
a) What is Mike's expected utility? b) What is the maximum amount that Mike is willing to pay for auto insurance? c) Suppose all car owners are like Mike insofar as they have a 10 percent chance of having an accident. An insurance company agrees to pay each person who has an accident the full value of his or her car. The company's operating expenses are $1,000. What is the minimum insurance premium that the company is willing to accept? d) Will Mike buy the company's policy? Why or why not?
Relative to the short-run demand for gasoline, the long-run demand for gasoline is
A) probably more elastic since people need time to change automobiles and driving habits. B) probably less elastic since people need time to change automobiles and driving habits. C) probably more elastic because people can hoard this good. D) probably less elastic because people cannot store this good.