Adverse selection in insurance requires that
a. all people face the same risk
b. potential customers facing more risk are no more interested in purchasing insurance
c. people are risk averse
d. insurers can tell higher risk people from lower risk people
c
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Trade is only beneficial if a nation has an absolute advantage in producing all products
Indicate whether the statement is true or false
With respect to monopolistic competition,
a. both the business-stealing externality and the product-variety externality are positive externalities. b. the business-stealing externality is a positive externality, while the product-variety externality is a negative externality. c. the business-stealing externality is a negative externality, while the product-variety externality is a positive externality. d. both the business-stealing externality and the product-variety externality are negative externalities.
The study of an economy's price level is explicitly a part of
A) macroeconomics. B) microeconomics. C) positive economics. D) normative economics.
Politicians will often be able to gain from support of trade restrictions because
A) foreigners benefiting from the restrictions will be a major source of political contributions. B) organized interest groups benefiting from the restrictions will make large contributions to political campaigns while most others will not feel strongly about the restrictions. C) the restrictions will lead to lower prices and substantial benefits for consumer groups. D) the restrictions will generate substantial benefits for consumer groups at the expense of well-organized labor and industrial interests.