1. _______ occurs when people smoke more after buying life insurance.

A. Adverse selection
B. Cournot and Bertrand competition
C. Moral hazard
D. Asymmetric information

2. There is no market supply curve in:

A. monopolistically competitive and monopolistic markets.
B. a monopolistically competitive market.
C. a monopolistic market.
D. a perfectly competitive market.

3. To maximize profit in the face of uncertainty, firms should produce the output where:

A. expected marginal revenue equals marginal cost.
B. expected marginal revenue equals expected marginal cost.
C. expected price equals expected marginal cost.
D. expected price equals marginal cost.

4. Which of the following is NOT an example of a managerial decision with risk-averse consumers?

A. The existence of chain stores
B. The existence of different product qualities
C. The presence of insurance for certain events
D. All of the statements associated with this question illustrate examples of managerial decisions with risk-averse consumers.

5. You are the manager of a firm that sells its product in a competitive market at a price of $60. Your firm's cost function is C = 33 + 3Q2. The profit-maximizing output for your firm is:

A. 6.
B. 10.
C. 3.
D. 5.

6. Brand loyalty can be enhanced through:

A. a price war.
B. an advertising campaign and a price war.
C. neither an advertising campaign nor a price war.
D. an advertising campaign.