Two companies in a city provide insurance for cars—Company A and B. Company A pays 100% of the money required for repair in case of an accident, while Company B pays 70% of the total money required
A research agency has found that Company A's customers have more accidents. Which of the following explains this difference? A) Moral hazard
B) Adverse selection
C) The presence of positive externalities
D) The presence of negative externalities
A
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Refer to Figure 16-1. Suppose the economy is in short-run equilibrium above potential GDP and wages and prices are rising
If contractionary policy is used to move the economy back to long run equilibrium, this would be depicted as a movement from ________ using the static AD-AS model in the figure above. A) D to C B) A to E C) C to B D) B to A E) E to A
The new GATS and TRIPS are separate agreements negotiated within the WTO framework as part of the Uruguay Round that apply to
A) services and aircraft. B) services and transportation. C) agriculture and textiles. D) services and intellectual property. E) textiles and transportation.
Voluntary agreements may not be a feasible method to internalize an externality when
A) the dollar value of the externality is large. B) the externality is negative rather than positive. C) there are significant transaction costs. D) there are high taxes on the firms that cause the externalities.
We can describe who bears the burden of a tax by using the concept of:
A. marginal burden. B. incidence. C. payee. D. marginal tax rate.