The so-called collective action problem is the reason why:
A. Taxpayers are not able to effectively counter special interest groups
B. Corporations have board of directors
C. We have local and national elections
D. Majority voting can lead to economically inefficient outcomes
A. Taxpayers are not able to effectively counter special interest groups
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According to the textbook, one of the most fundamental purposes of insurance is to
A. eliminate risk entirely for everyone. B. transfer risk from risk seeking people to risk neutral people. C. transfer risk from those who wish to avoid it to those who are willing to bear it (for a fee). D. eliminate risk entirely, while tolerating uncertainty.
When you have an omitted variable problem, the assumption that E(ui Xi) = 0 is violated. This implies that
A) the sum of the residuals is no longer zero. B) there is another estimator called weighted least squares, which is BLUE. C) the sum of the residuals times any of the explanatory variables is no longer zero. D) the OLS estimator is no longer consistent.