Charging drivers with good records lower premiums than drivers with bad records is an example of an attempt by insurance companies to deal with the problem of
A) moral hazard.
B) adverse selection.
C) drunk driving.
D) failure of policyholders to keep paying their premiums.
B
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Asymmetric information refers to a situation where people who pose the greatest risk to insurers are the ones who buy insurance
Indicate whether the statement is true or false
The management of a rental building faces a rent control situation, where it cannot charge more than $400 a month in rent on the apartment. The management knows that the apartments are high in demand and renters would be willing to be $1000 per month for them. The management decides to offer controlled rent but force the tenants to rent furniture from them. This is an example of
a. Tying b. Bundling c. Exclusion d. Fraud
If a country has a comparative advantage in wine moved from autarky to free trade, this would cause what reaction in the world market?
A. Foreign wine producers would be opposed. B. Domestic wine consumers would be opposed. C. Domestic wine producers would be opposed. D. Domestic wine consumers would not be influenced.
If a country experiences a relatively high inflation rate compared with other economies, then the demand for its currency will _________________.
a. increase b. stabilize c. flatten d. lessen