If a doctor knows that an insurance company will pay for most of a patient's bill, the doctor has more of an incentive to require additional medical procedures and tests, even if the patient may not require them. This is an example of
A) moral hazard.
B) the principal-agent problem.
C) asymmetric information.
D) adverse selection.
Answer: B
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Imagine that the state legislature raises the tax on gasoline by 10 cents/gallon. What most likely happens next?
A. Service station operators pass along the tax to you, adding the 10 cents to the price of a gallon of gas. B. Service station operators grumble, but pay the tax without passing the cost along to you. C. Service station operators pass along as much of the tax to you as they can, perhaps around 6 cents/gallon. D. The tax does not affect the outcome in the gasoline market.
A tradable emissions permit program is efficient because the cap protects the environment while: a. generating substantial revenues for the government
b. keeping compliance and administration costs relatively low. c. while requiring the same response by each polluter. d. none of above
The labor-force participation rate measures the percentage of the adult population currently in the labor force
a. True b. False Indicate whether the statement is true or false
Under socialism, factories, farms, mines, and natural resources are owned by:
A. laborers. B. government. C. private stockholders. D. no one.