Adverse selection occurs when a sales offer attracts the kinds of customers that the seller does not want
Indicate whether the statement is true or false
TRUE
You might also like to view...
Tom and Jerry have two tasks to do all day: make dishes and build fences. If Tom spends all day making dishes, he will have make 16 dishes. If he instead devotes his day to building fences, Tom will build 4 fences. If Jerry spends his day making dishes, he will make 14 dishes; if he spends the day building fences, he will build 7 fences. At the end of the day, Jerry could have produced:
A. 14 dishes and 7 fences. B. 12 dishes and 6 fences. C. 10 dishes and 5 fences. D. 6 dishes and 4 fences.
The interest rate effect explains that higher prices
a. make it more expensive to borrow, leading to higher interest rates and less investment b. make people worse off by reducing the value of their wealth, leading them to save more and spend less c. decrease borrowing, leading to higher interest rates and less investment d. decrease borrowing, leading to lower interest rates and more investment e. increase borrowing, leading to higher interest rates and less investment
In 1903 when air pollution from a Montana smelter owned by the Anaconda Smelting Company destroyed grass and killed some cattle owned by ranchers downwind from the smelter, the ranchers sued for damages and the court
a. ordered the company to pay for the damages caused by its smelter. b. held the company liable for any future damages caused by its omissions. c. recognized that the company would pollute less when it was made accountable for the damage caused by its omissions. d. all of the above.
A monopolist sets prices above the competitive price and output below the competitive output level. Some customers are willing to pay more than marginal cost, yet do not receive the product. Thus:
A. it is clear that monopolists experience decreasing returns to scale. B. not all gains from trade are exhausted. C. all gains from trade are exhausted. D. it is clear that monopolists do not maximize profits.