Good A and B are substitutes. Good A and B are complements. Good A and B are substitutes because the percentage change in the price of good A is greater than the percentage change in quantity demanded of Good B. Good A and B are complements because the percentage change in the price of good A is greater than the percentage change in quantity demanded of Good B. Good A and B are substititutes because when the price of A goes up, the quantity demanded of B goes down even though the price of Good B hasn't changed. Good A and B are complements because when the price of A goes up, the quantity demanded of B goes down even though the price of Good B hasn't changed. Good A and B are complements because when the price of A goes up, the quantity demanded of B goes up even though the price of Good B hasn't changed. O Good A and B are substitutes because when the price of A goes up, the quantity demanded of B goes up even though the price of Good B hasn't changed. None of the answers are correct.

Moral hazard is consistent with the idea that when people have health insurance that protects against high medical expenses, they tend to get sick more often. seek less medical care. get sick less often. seek more medical care.

Soft selling occurs when a buyer is skeptical of the usefulness of a product and the seller offers to set a price that depends on realized value. For example, suppose a sales representative is trying to sell a company a new accounting system that will, with certainty, reduce costs by 10%. However, the customer has heard this claim before and believes there is only a 30% chance of actually realizing that cost reduction and a 70% chance of realizing no cost reduction. Assume the customer has an initial total cost of $300. According to the customer's beliefs, the expected value of the accounting system, or the expected reduction in cost, is .   Suppose the sales representative initially offers the accounting system to the customer for a price of $19.50. The information asymmetry stems from the fact that the    has more information about the efficacy of the accounting system than does the     . At this price, the customer    purchase the accounting system, since the expected…

Soft selling occurs when a buyer is skeptical of the usefulness of a product and the seller offers to set a price that depends on realized value. For example, suppose a sales representative is trying to sell a company a new accounting system that will, with certainty, reduce costs by 10%. However, the customer has heard this claim before and believes there is only a 20% chance of actually realizing that cost reduction and a 80% chance of realizing no cost reduction. Assume the customer has an initial total cost of $200. According to the customer's beliefs, the expected value of the accounting system, or the expected reduction in cost, is $____   .   Suppose the sales representative initially offers the accounting system to the customer for a price of $12.00. The information asymmetry stems from the fact that the ______(sales rep or buyer)    has less information about the efficacy of the accounting system than does the  ______(sales rep or buyer)   . At this price, the…

** PRACTICE TEST **

Calculate absolute and relative risk aversion for U(x)=ln(x) and U(x)=-e-x where wealth is (w)