Adverse selection in insurance requires that
a. all people face the same risk
b. potential customers facing more risk are more interested in purchasing insurance
c. people are not risk averse
d. insurers can tell higher risk people from lower risk people
b
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If a 2 percent change in price leads to a ________ percent change in the quantity demanded, then demand is ________
A) 2; elastic B) 1; unit elastic C) 3; inelastic D) 1; inelastic E) 0; perfectly elastic
Refer to the information above. What is the value of net investment in period 5?
A) 17.5 B) 89.25 C) 106.75 D) 612.5
Suppose pigs (P) can be fed corn-based feed (C) or soybean-based feed (S) such that the production function is P = 2C + 5S. If the price of corn feed is $4 and corn feed is on the horizontal axis, and the price of soybean feed is $5 and soybean feed lies on the vertical axis, what is expansion path?
a. C =5S/2 b. S =2C/5 c. the horizontal axis d. the vertical axis
Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher