In Figure 9.6, if full employment occurs at QC, then aggregate demand is
A. Too small, causing cyclical unemployment.
B. Too small, causing demand-pull inflation.
C. Too great, causing cyclical unemployment.
D. Just right.
Answer: A
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Refer to the figure above. Which of the following statements are true in this case?
A) P1 is the socially optimal price for Good X. B) P2 is the price of Good X in a free market. C) Q2 is the efficient level of output of Good X. D) Q2 is the quantity supplied of Good X in a free market.
Scatterbrain Samantha often forgets to lock her house. This has caused the probability of a burglary to be 30%. If her house gets broken into, she faces a property loss of $10,000, otherwise she gets to keep her $100,000 . If Samantha is offered an insurance policy for her house to protect her from loss at $3,000, what is her expected wealth?
a. $80,000 b. $87,000 c. $97,000 d. $99,000