One result of asymmetric information in health insurance markets is
a. an optimal number of insurance policies sold.
b. adverse selection.
c. externalities in consumption.
d. a low marginal benefit of additional information for the buyer of insurance.
e. The principal-agent problem.
B
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Mutual funds ________
A) accept deposits and issue loans B) sell shares and buy financial instruments C) are a special type of commercial bank D) issue policies and receive premiums
The value of price elasticity of demand for a good with no close substitutes
a. will tend to be greater than -1 (e.g., -0.03) b. will tend to be less than -1 (e.g., -4) c. will tend to be equal to -1 d. will tend to be equal to 0 e. cannot be determined without more information
If the demand for a good is relatively inelastic, this means that consumer purchases of the good are
a. not very sensitive to the price of the good. b. highly sensitive to the price of the good. c. unrelated to the price of the good. d. unaffected by changes in the income level of consumers.
The nominal interest rate tells you how fast the number of dollars in your bank account rises over time
a. True b. False Indicate whether the statement is true or false