A key assumption of the classical model is that
a. government intervention is important to get markets to clear
b. prices adjust until quantity supplied equals quantity demanded
c. markets never clear in the long run
d. demand adjusts in order to meet supply
e. prices remain constant and supply and demand adjust
B
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If an electricians' union is successful in its attempts to restrict entry into that craft, it will shift
a. the supply curve of electricians to the right b. the supply curve of electricians to the left c. the demand curve for electricians to the right d. the demand curve for electricians to the left e. both the supply and demand curves for electricians
Suppose a consumer's expected utility function given two possible states of nature A and B can be expressed in terms of dollars worth of food consumption, F, in both states as U(FA, FB) = [0.6 × ln(FA)] + [0.4 × ln(FB)]. For this utility function, MUA is (0.6/FA) and MUB is (0.4/FB). Without insurance, the consumer can consume 200 in state A but only 50 in state B. The consumer can purchase insurance at a premium of 50 cents per dollar of benefit. How much insurance will she purchase?
A. $50 B. $150 C. $250 D. $416.67