Adverse selection and moral hazard arise because of
A. mechanism designs for dealing with informational problems.
B. asymmetric information.
C. risk aversion.
D. selection problems.
Answer: B
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A union of all workers from a particular industry is a(n)
A) craft union. B) conglomerate union. C) industrial union. D) expansive union.
Collusion is:
A. easy to maintain since firms always have an incentive to renege. B. difficult to maintain since firms rarely agree on the terms. C. easy to maintain since firms face similar cost curves. D. difficult to maintain since firms always have an incentive to renege.
Which of the following may reduce the MC of companies emitting SO2 pollution?
A. The government eliminated subsidies to companies for reducing pollution. B. A study came out suggesting that additional cancers are linked to exposure to SO2 pollution. C. The government is subsidizing scrubbers which are devices that can be used to remove some SO2 pollution. D. Consumers are worried about the pollution and stopped buying the products from companies with high pollution.
Protectionist legislation is often passed because:
A. employers in the affected industry lobby more effectively than the workers in that industry. B. both employers and workers in the affected industry lobby for protectionist policies. C. trade restrictions often benefit domestic consumers in the long run, though they must pay more in the short run. D. it helps to keep domestic prices at a relatively lower level.