Upon learning that his auto transmission is about to fail, Ray Roma sells his car to an unsuspecting buyer. This circumstance illustrates the:
A. adverse selection problem.
B. free-rider problem.
C. moral hazard problem.
D. principal-agent problem.
Answer: A
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A straight line falls when moving rightward along it. Hence the slope of the line is
A) negative. B) positive. C) zero because it is a straight line. D) undefined. E) perhaps positive, negative, or zero, but without more information it is impossible to determine.
Alice, Bud, and Celia can produce rubber bands in a perfectly competitive market. If they enter the market, the minimum average total cost for a bundle of rubber bands, for the three of them is $2, $3, and $4, respectively
If the market price is $2.10 per bundle, then A) all three of them will enter the market. B) only Alice will enter the market. C) Alice and Bud will enter the market. D) Bud and Celia will enter the market. E) Alice and Celia will enter the market.
If issues can be ranked along a one-dimensional continuum, a successful political candidate will be an individual who is best able to align her political platform to the positions of the median voter
a. True b. False
A perfectly competitive firm has a random marginal cost with a 50 percent chance of a high marginal cost of $10, a 30 percent chance of a marginal cost of $8, and a 20 percent chance of a low marginal cost of $5. What is the firm's expected marginal cost?
A) $7.80 B) $8.00 C) $9.20 D) $8.40