The marginal productivity theory of income distribution has been criticized because:
A. the resulting distribution of income is likely to be too equal to maintain production
incentives.
B. income from inherited property is inconsistent with the theory.
C. purely competitive conditions characterize most resource markets.
D. it fails to recognize that resource demand is derived from product demand.
Answer: B
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Which of the following best illustrates the adverse selection problem?
A) a professional football team that consistently drafts poor players B) an economic agent who engages in risky behavior once a loan is received C) an individual who hides a pre-existing condition from a health insurer D) an individual who experiences a lost of income by not working while attending college
Disadvantages of experiments include the fact that:
A. decisions made in the laboratory replicate those made in the real world. B. laboratory experiments introduce influences on decision making that are difficult to measure or control. C. the number of subjects is typically so large, that it is difficult to apply the results to economic behavior in the population. D. decisions made in the laboratory replicate those made in the real world and the number of subjects is typically so large, that it is difficult to apply the results to economic behavior in the population.