Which of these refers to the situation in which one party to an economic transaction takes advantage of knowing more than the other party to the transaction?
A. Moral hazard
B. Adverse selection
C. Biased selection
B. Adverse selection
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Economic models are often based on assumptions because they:
A) help simplify complex real-world phenomena. B) help explain the past. C) help test models even when relevant data are unavailable. D) help predict the future with higher accuracy. A model is based on an assumption that an additional year of education increases a student's future wage by 20%.
The table above provides information about the marginal social cost and marginal social benefit of street lights, which are a public good
a) What quantity would a private company provide? Why? b) What is the efficient quantity?
Investment in Musical Acts Signing new music acts can be highly speculative. Record producers at music studios have to get budget approval before they sign a new act to a recording deal. Most acts perform a tried and true form of popular music in which
record sales can be pretty well predicted. However, once they get approval for their budgets, why do producers sometimes sign riskier acts who either flop or "break-out" into the next sensation?
Monetizing the debt has what effect on the economy?
a. slow increase in AS with steady inflation b. rapid increase in AD with an increase in inflation c. rapid increase in AS with a drop in inflation d. decrease in AD with an increase in inflation