When members of an oligopolistic industry agree to collude, raising their product price substantially above average cost, the passage of time (months and years)
a. is usually needed for the members to solidify their cooperation.
b. usually results in finer control of prices and markets by the group and larger profit margins.
c. is likely to erode the agreement, as ways to cheat are developed by some participants and new entry is encouraged by the high price.
d. seldom has any impact on the agreement, as long as the participants maintain high profit levels as a result of the agreement.
C
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With respect to the health insurance market, what is moral hazard?
A) Moral hazard refers to the actions people take, after they purchase an insurance policy, that make the insurance company worse off. B) Moral Hazard refers to to people who purchase one type of insurance policy when they would have been better off purchasing a different policy. C) Moral Hazard refers to the situation in which a person purchasing an insurance policy takes advantage of knowing more about his health than the insurance company. D) Moral hazard refers to the actions people take before they purchase an insurance policy.
Suppose in the beginning of 2013, a country has a national debt of $5,000 billion. Its GDP in 2013 is $20,000 billion and its budget surplus of $130 billion. Compute its debt-GDP ratio at the end of the year.
A) 2.6% B) 25.0% C) 24.4% D) 6.5%