Insurance companies provide higher insurance premiums to plans with lower deductibles as a way of:
A. reducing the lemons problem.
B. avoiding moral hazard.
C. screening between types of drivers.
D. optimizing information acquisition.
Answer: C
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The following are the equations for the supply and demand curves in the market for weezils: Demand: Qd= 20?2P Supply: Qs= 5 + 3P where Qdis the quantity demanded, Qsis the quantity supplied, and P is the price per weezil in dollars. Refer to Exhibit 4-1. According to the data given, the equilibrium price of a weezil is
A. $3. B. $5. C. $11. D. $14.
Which of the following is a pure public good?
a) a library book b) public transportation c) the judicial system d) an interstate highway e) all of the above
The use of high leveraging by banks leads to the banking system's:
A. Competitiveness B. Instability C. Vital role in the economy D. Monopoly power
An economy has two workers, Jen and Rich. Everyday they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Rich to produce one TV?
A. 12 radios B. 3 radios C. 1/5 radio D. 1/3 radio