Consider a car dealership that advertises a three-year lease at $250 per month. When you arrive to apply, you discover that the lease requires a down payment of $3600 dollars. You will undertake the lease if
A) you value the lease at least $350 per month.
B) you value the lease at least $250 per month, the $3600 is a sunk cost.
C) you value the lease less than $350 per month.
D) you value buying a new car at $400 per month.
A
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When isoquants get progressively further apart there is
a. increasing returns to scale b. decreasing returns to scale c. constant returns to scale
Moral hazard occurs when:
a. Individuals and institutions do not bear the full cost of their own mistakes. b. General social decay leads to unethical business decisions. c. The actions of one (or a few) result cause harm to others, when the same would not occur if the actions were by many. d. General social decay leads to unethical business decisions. e. All of the above are examples of moral hazard.