You may be unwilling to buy a used car because you suspect the last owner found out the car was a lemon. You may treat a car you rented with a little less care than you would use on your own car
a. Both examples primarily illustrate adverse selection.
b. Both examples primarily illustrate moral hazard.
c. The first example primarily illustrates adverse selection; the second primarily illustrates moral hazard.
d. The first example primarily illustrates moral hazard; the second primarily illustrates adverse selection.
c
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Use the marginal principle to explain why government mandated safety features in automobiles during the 1960s and 1970s resulted in an increase in collisions between automobiles and bicycles
What will be an ideal response?
Vaccinations tend to result in a negative externality
Indicate whether the statement is true or false
Since 1929, total government taxes as a percentage of GDP:
a. climbed from 10 percent to over 35 percent. b. remained close to 30 percent. c. climbed from 30 percent to about 50 percent. d. climbed from 15 percent to about 50 percent.
Suppose the market for "soda X" is in equilibrium. If the FDA announced today that this soda has been proven to cause a fatal disease, what would be most likely to happen to the equilibrium price and equilibrium quantity of soda X?
a. price increases and quantity increases b. price decreases and quantity increases c. price increases and quantity increases d. price decreases and quantity decreases e. no change in price and quantity