Answer the following statements true (T) or false (F)
1. Better Business Bureaus in various cities exist partly in order to try to deal with inadequate buyer information about sellers.
2. A moral hazard problem occurs before a transaction - when people alter their behavior before they sign a contract, imposing costs on the other party.
3. Adverse selection is when someone with home insurance decides to take the chance that a dying tree would fall on the garage, rather than spend the money to have the tree cut down.
4. When the government bails out large banks when the banks become unstable, it could lead to a moral hazard problem.
1. TRUE
2. FALSE
3. FALSE
4. TRUE
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The relative amounts of the goods that will be exchanged for each other in trade refers to the nations'
A) autarky status. B) absolute advantages. C) terms of trade. D) production possibilities.
To be binding, a price floor must be set below the equilibrium price
a. True b. False Indicate whether the statement is true or false
If MC = Q/15 represents marginal cost for a monopolist and market demand is given by Qd = 500 - 10P, the equation for marginal revenue is:
A. MR = 50 - (1/10)Q. B. MR = 50Q - (1/5)Q2. C. MR = 50Q - (1/10)Q2. D. MR = 50 - (1/5)Q.
Which one of the following accounting identities is TRUE?
A. National income plus profit equals personal income. B. Disposable personal income plus non-income expense items equals personal income. C. Disposable personal income plus indirect business taxes equals personal income. D. Disposable personal income plus personal income taxes equals personal income.