Individuals who face greater risks
a. are more likely to purchase insurance
b. are less likely to purchase insurance
c. are neither more nor less likely to purchase insurance
d. are risk neutral
Question 2
The principal difference between economic profits for a monopolist and for a competitive firm is that:
a. monopoly profits create major problems of equity whereas competitive profits do not.
b. competitive profits exist only in the short run whereas monopoly profits may exist in the long run as well.
c. monopoly profits represent a transfer out of consumer surplus whereas competitive profits do not.
d. monopoly profits are usually larger than competitive profits.
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