Which of the following is NOT an example of the adverse selection problem?
A. Buyers in a market for used cars must choose from an undesirable selection of used cars.
B. An insurance company must choose one price for its coverage for both high-cost and low-cost people.
C. Commercial banks would rather use credit rationing than raising interest rates in the presence of excess demand for loans.
D. An insured motorist drives more recklessly.
Answer: D
You might also like to view...
The graph shown portrays a subsidy to buyers. The amount of money spent on this subsidy by the government is:
A. $3,600.
B. $2,400.
C. $6,000.
D. $800.
In a proportional tax system each individual would pay the same dollar amount in taxes
a. True b. False Indicate whether the statement is true or false
The Employment Act of 1946 dictated the U.S. goal of maintaining high employment through high economic growth but did not specify any goals with regard to the price level
a. True b. False Indicate whether the statement is true or false
In a prisoner's dilemma, only one firm has a dominant strategy
a. True b. False Indicate whether the statement is true or false