What are the two different types of relationships that variables can have? Explain each. What do these relationships look like when they are graphed?
What will be an ideal response?
Variables can have two relationships: positive (or direct) and negative (or inverse). A positive relationship occurs when the variables move in the same direction, so that when one increases, the other also increases. A negative relationship occurs when the variables move in the opposite direction, so that when one increases, the other decreases. When a positive relationship is graphed, the line slopes upward to the right. When a negative relationship is graphed, the line slopes downward to the right.
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With regard to the rule of caveat emptor in colonial America, which of the following does not apply?
(a) "Let the buyer beware." (b) This rule largely replaced the earlier rule of markets, market overt, by late colonial times. (c) It could be applied anywhere without the protective regulations of colonial officials. (d) It was meant to cover fraud, and aggrieved buyers could always sue sellers in civil courts for damages.
Incomplete property rights create transactions costs because
a. any party wanting to use the disputed resource does not have a fixed group with which to bargain. b. the use of the disputed resource cannot be fully monitored by the government. c. no one can prevent people from using the disputed resource for free. d. others may receive a higher value from the disputed resource that those who own the property right to it.