In the insurance market, "moral hazard" refers to the problem that
A) insurers can't tell high-risk customers from low-risk customers.
B) high-risk customers have an incentive to give false signals to make themselves look like low-risk customers.
C) companies may unfairly lump individuals together by race, sex, age or other characteristics in an attempt to use demographic data to pinpoint high-risk populations.
D) individuals are willing and able to pay different amounts for insurance, but must all be charged the same amount.
E) individuals may change their behavior after the insurance is bought, so that they behave in a more high-risk manner than they did before.
E
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What will be an ideal response?
Refer to the above table. If the price is $5, the maximum economic profits this firm could earn is
A) $520. B) $420. C) $414. D) $106.
Analysis indicates that the economy is in a recessionary gap. Which of the following is the least appropriate policy mix in this situation?
a. a budget surplus and expansionary monetary policy b. a budget deficit and expansionary monetary policy c. a budget deficit and contractionary monetary policy d. a budget surplus and contractionary monetary policy
As the U.S. economy recovers from the recession of 2007-2009, stubbornly high unemployment is a concern. For each of the three business cycle models, identify the appropriate policy regime
What will be an ideal response?