If the expected rate of return on investment spending increases, the investment spending function _____

The problem of moral hazard arises because

a. life is full of all sorts of risks. b. after people buy insurance, they have less incentive to be careful about their risky behavior. c. a high-risk person is more likely to apply for insurance than is a low-risk person. d. insurance companies go to great effort to avoid paying claims to their policy holders.

In which of the following industries are economies of scale exhausted at relatively low levels of output?

A. Aircraft production. B. Automobile manufacturing. C. Concrete mixing. D. Newspaper printing.