If the agent has more information than the principal and there is only one state of nature, then
A) efficiency in both production and risk-bearing can be achieved.
B) only efficiency in production can be achieved.
C) only efficiency in risk-bearing can be achieved.
D) neither efficiency in production nor efficiency in risk-bearing can be achieved.
A
You might also like to view...
If you go to a bar tonight and have three beers before going home to study economics, will you likely receive some consumer’s surplus? Explain why or why not.
What will be an ideal response?
Explain why in the case of economies of scope the production possibility frontier is bowed outward
What will be an ideal response?
Which of the following is likely to result in a higher equilibrium price? a. An increase in both demand and supply
b. A decrease in both demand and supply. c. An increase in demand and a decrease in supply. d. A decrease in demand and an increase in supply.
In the open-economy macroeconomic model, if the supply of loanable funds shifts right, then
a. net capital outflow increases so the demand for dollars in the market for foreign-currency exchange shifts right. b. net capital outflow increases so the supply of dollars in the market for foreign-currency exchange shifts right. c. net capital outflow decreases so the demand for dollars in the market for foreign-currency exchange shifts left. d. net capital outflow decreases so the supply of dollars in the market for foreign-currency exchange shifts right.