Moral hazard is associated with

A) imperfect information.
B) perfect information.
C) the low costs of monitoring behavior.
D) all of these choices.


A

Economics

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Assume a subsidy to buyers has been enacted in the market in the graph shown. With the subsidy, the producers sell _____ units and receive _____ for each of them.



A. 100; $46
B. 100; $30
C. 150; $40
D. 150; $24

Economics

Suppose, before the Asian financial crisis, the Thai baht was fixed against the dollar at a rate of 26 bahts for one U.S. dollar. If the exchange rate were allowed to float freely, the market would then set the rate at 35 bahts for one dollar. Under these circumstances, we say that the baht was:

a. about to appreciate. b. fixed below its par value. c. overvalued. d. undervalued. e. revalued.

Economics

Player 1 and Player 2 are playing a game in which Player 1 has the first move at A in the decision tree shown below. Once Player 1 has chosen either Up or Down, Player 2, who can see what Player 1 has chosen, must choose Up or Down at B or C. Both players know the payoffs at the end of each branch. Suppose Player 1 and Player 2 enter into a binding agreement in which Player 1 agrees to pay Player 2 a fixed amount of money to get Player 2 to play Up when it is Player 2's turn. How much will Player 1 have to pay Player 2 to get Player 2 to play Up?

A. $0 B. at least $10. C. at least $50. D. at least $20.

Economics

The price elasticity of demand can be computed as

A) change in total utility/change in quantity. B) change in price/change in quantity demanded. C) percentage change in quantity demanded/percentage change in price. D) change in quantity demanded/change in price.

Economics