If a buyer or seller enters into an exchange with another party who has more information, there is
A. a free-rider problem.
B. symmetric information and moral hazard.
C. asymmetric information and adverse selection.
D. a negative externality imposed.
Answer: C
You might also like to view...
An indication that Insurance companies anticipate adverse selection is
a. they do not require a deductible b. they do not classify clients into different risk types according to their claim history c. they classify clients into different risk types according to pre-existing conditions d. they do not require a co-payment
If the government increases the income tax rate, consumers have:
A. less to spend and will reduce their consumption. B. more to spend and will reduce their consumption. C. less to spend and will increase their consumption. D. more to spend and will increase their consumption.
If MPC = 0.75, a $40 billion decrease in government purchases would have what size effect on the "first round" of changed consumption, and what effect on AD?
a. reduce "first round" consumption by $160 billion; reduce AD by $640 billion b. reduce consumption by $120 billion; reduce AD by $480 billion c. reduce consumption by $40 billion; reduce AD by $160 billion d. reduce consumption by $30 billion; reduce AD by $160 billion
Which of the following is best characterized as a public good?
A. a public library B. primary education C. police protection D. a church