A pooling equilibrium in insurance markets is inefficient because everyone buys too little insurance (relative to the efficient amount).
Answer the following statement true (T) or false (F)
False
Rationale: The pooling equilibrium is inefficient because high cost consumers buy too much and low cost consumers buy too little.
You might also like to view...
In the short-run, if the Federal Reserve decreases interest rates, then consumption and investment ________, aggregate expenditure ________, and short-run equilibrium output ________.
A. increase; increases; increases B. increase; increases decreases C. decrease; decreases; decreases D. increase; decreases; decreases
A local labor market for lawn-mowing workers is initially in equilibrium. If researchers develop a new inexpensive grass seed that provides a lush, slow-growing lawn, which of the following will occur in the short run?
a. Both labor demand and labor supply will drop, leading to a higher wage rate but lower employment. b. Both labor demand and labor supply will rise, leading to a lower wage rate and lower employment. c. Labor demand will drop, leading to a lower wage rate and higher employment. d. Labor supply will drop, leading to a higher wage rate and lower employment. e. Labor demand will drop, leading to a lower wage rate and lower employment.
The following data give the dates of successive turning points in U.S. economic activity and the corresponding levels of real GDP at the time. Turning PointDateReal GDP (1996 $ billions)(A)July 19531992.2(B)May 19541941.0(C)Apr. 19572182.7(D)Apr. 19582117.4(E)Apr. 19602391.0 Which of the turning points are troughs?
A. (C), (D), and (E) B. (B) and (D) C. (A), (B), and (C) D. (A), (C), and (E)
Suppose that a mining company employs 80% of the available laborers in a town. Explain what will happen to the number of laborers hired and the wage rate paid by the mine if a minimum wage is set at the competitive level
What will be an ideal response?