When what people pay does not necessarily reflect the real value they put on a good, it is likely that the:
A. good will be undersupplied.
B. not a socially desirable good.
C. free rider problem does not exist.
D. good is easily excludable.
Answer: A
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Adverse selection arises in the health insurance market because ________
A) buyers have private information B) sellers have private information C) different firms provide different insurance schemes D) the number of buyers and sellers is large
The minimum-leverage-ratio approach to capital adequacy requirements
A) has been dominant since the 1930s. B) was phased out in the 1990s. C) was adopted in the 1990s. D) has never been implemented.
A customs union is an organization of nations whose members:
a. have impenetrable trade barriers among themselves but impose no trade barriers on nonmembers. b. have no trade barriers among themselves but impose common trade barriers on nonmembers. c. have no trade barriers among themselves but each member country chooses its own trade policies with nonmember countries. d. retaliate each other by raising reciprocal tariffs and calling for fair trade. e. neither have trade barriers among themselves nor impose any restriction on the nonmember countries.
Which of the following pairs illustrates the two extreme examples of market structures?
a. perfect competition and oligopoly b. perfect competition and monopoly c. monopoly and monopolistic competition d. oligopoly and monopolistic competition