ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Which of the following does not correctly explain about the purposeful behavior that reflects "rational self-interest? 1) Sellers try to make the most profits possible from the sales of their products as many as possible. 2) Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase. Producers allocate their limited resources to minimize their costs to achieve a 3) certain level of production. 4) People care for nothing but his or her own goal since there is a tradeoff problem caused by limited resources. Ouestion 14 (4 points)arrow_forwardsocial preferences are not really preferences, and unselfish behavior is really motivated by the desire to follow rules and conventions with respect to what is fair. Is this interpretation correct?arrow_forwardDoes the same principal-agent conflict exist when people donate other items such as bone marrow, blood, eggs, sperm? Please explain why or why not.arrow_forward
- Suppose an insurance company wants to charge a very healthy individual a premium of $1,200 a year for health coverage. It also wants to charge a less healthy individual a premium of $3,600 a year for health coverage. It is seeking to ascertain from any given customer information regarding his/her health by asking for several pieces of health-related information, such as doctor assessments of the person’s health, history of health-related problems, etc. The opportunity cost of a very healthy person securing a health report is $250 and the opportunity cost of a less healthy person securing a health report is $650. Of the choices below, how many reports should the company request to best ensure its paying the right premium to the right person? Reconsider the previous health insurance question. Of the choices below, which one is closest to the spread between the minimum possible number of reports and the maximum possible reports to achieve the company’s desired outcome? Reconsider again…arrow_forward31) People respond to incentives A) by ignoring negative incentives and responding to positive incentives only. B) only when they are irrational. C) by calculating their individual costs and benefits and determining which is greater. D) when they have low incomes. 32) The threat of a large fine for failure to pay income taxes is an example of A) the excessive power of the Internal Revenue Service. B) the ineffectiveness of incentives to get people to pay their taxes. C) a negative incentive to get all people to pay taxes. D) people failing to consider all the benefits the government provides them. 33) A politician says that the government should tax behavior they want less of and subsidize behavior they want more of. This is an example of A) cynical behavior in modern democracies. B) failing to consider the alternatives available to the government. C) a concern that people are not rational when they make decisions. D) using incentives to alter…arrow_forward
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