Grace just got her first cell phone, an iPhone, for graduation. She tosses her iTouch in a drawer and never touches it again, even though she could easily sell it for $75 on Craigslist. Grace's choice is ________ because ________.
A. irrational; she weighs the $200 she paid for the iTouch and the $75 she could sell it for now
B. rational; she weighs the $200 she paid for the iTouch and the $75 she could sell it for now
C. irrational; she would not pay $75 to buy the iTouch today
D. rational; she would not pay $75 to buy the iTouch today
Answer: C
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Over the past decade, the incomes of the top 1 percent have increased disproportionately higher than that of the middle class. These changes mean that the Lorenz curve moved ________ the 45 degree line and the Gini ratio has ________
A) closer to; decreased B) closer to; increased C) further away from; decreased D) further away from; increased
When insurance companies offer fair insurance,
A) risk-averse agents always purchase it. B) risk-neutral agents never purchase it. C) risk-loving agents always purchase it. D) nobody would purchase fair insurance.