Risky transactions are those in which:
A. one party withholds information from the other party and uses that to his advantage.
B. one party to a transaction uses the other party's lack of information to their advantage.
C. there is an balance of information between buyer and seller.
D. complete information is not available.
Answer: D
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Peter's monthly income increases from $1,500 to $1,600. As a result, he increases the number of DVDs he buys per month from 2 to 3. Peter's demand for DVDs is
A) price elastic. B) price inelastic. C) income elastic. D) income inelastic.
There will be no deadweight loss if the marginal benefit to consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized
Indicate whether the statement is true or false
When a firm produces less output, it can reduce:
A. marginal revenue. B. its fixed costs but not its variable costs. C. average fixed cost. D. its variable costs but not its fixed costs.
The tendency for high-risk projects to be overrepresented among investors of projects is
A. financial intermediation. B. asymmetric information. C. adverse selection. D. moral hazard.