The above figure shows Sam's budget line and one of his indifference curves. What combination of coffee and gasoline will Sam select?
A) combination a because that contains all the gasoline he needs and still has some coffee
B) combination c because that contains all the coffee he needs and some gasoline
C) combination b because it is on his budget line and on the highest attainable indifference curve
D) none of the above
C
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A firm that has taken advantage of economies of scale and expanded to become the only producer in the market is
A) a cartel. B) a natural monopoly. C) a monopolistic competitor. D) an oligopolist.
Mary is a low-risk applicant for a loan at a bank, while John is a high-risk applicant. If the bank increases the interest rates it charges on loans, _____
a. John is likely to leave the market for loans b. the problem of moral hazard will prevent John from getting a loan c. the commons problem will prevent Mary from getting a loan d. Mary is likely to leave the market for loans e. both Mary and John will leave the market for loans