Two consequences of asymmetric information are adverse selection and moral hazard. An important distinction between the two is
A) adverse selection exists prior to the completion of a transaction while moral hazard occurs after the transaction is completed.
B) moral hazard exists prior to the completion of a transaction while adverse selection occurs after the transaction is completed.
C) moral hazard leads to an inefficient quantity while adverse selection leads to an efficient quantity.
D) adverse selection leads to an inefficient quantity while moral hazard leads to an efficient quantity.
A
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If a worker can produce 20 units of output which can be sold for $4 per unit, what is the maximum wage that firm should pay to hire this worker?
A) It depends on what the going wage rate is in the labor market. B) $80 minus the firm's profit markup C) $80 D) There is insufficient information to answer the question.
The ________ refers to the situation when people are promoted beyond their level of competence
a. Peter Principle b. Abernathy Principle c. Delaney Principle d. Suskind Principle
Which of the following statements regarding the Federal Open Market Committee is correct?
a. Only the five voting regional Fed presidents attend the meetings. b. All regional Fed presidents attend and vote at the meetings. c. All regional Fed presidents attend the meetings, but only five get to vote. d. Regional Fed presidents may neither attend nor vote the meetings.
What is the CPI?
A. The consumer price index B. The Consumer Price Institute C. The consumer protection index D. The consumer product index