Adverse selection occurs when an agreement encourages undesirable behavior
Indicate whether the statement is true or false
False. This is a moral hazard. Adverse selection occurs if the offer to make an agreement attracts a certain type person who undertakes the undesirable behavior anyway.
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A monopoly firm's demand curve
A) is more inelastic than the demand curve for the product. B) is inelastic at high prices and elastic at lower prices. C) is perfectly inelastic. D) is the same as the market demand curve.
When using expert opinion, consumer surveys, test marketing, and price experiments to analyze consumer behavior, managers must consider whether the answers given in these formats represent actual market behavior
Indicate whether the statement is true or false
Good news for farming can be bad news for farmers because the
a. supply curve for an individual farmer is usually perfectly elastic. b. supply curve for an individual farmer is usually perfectly inelastic. c. demand for basic foodstuffs is usually inelastic, meaning that factors that shift supply to the right decrease total revenues to sellers. d. demand for basic foodstuffs is usually elastic, meaning that factors that shift supply to the right increase total revenues to sellers.
Explain how the listed events (a-d) would affect the following at Hilton Hotels. i. Marginal cost ii. Average variable cost iii. Average fixed cost iv. Average total cost
a. Hilton decides on an across-the-board 5 percent increase in executive salaries. b. Hilton decides to eliminate all print advertising. c. Hilton signs a new contract with the Culinary Workers Union that requires the company to increase wages for all its kitchen workers. d. The federal government starts to levy a $5 room tax on all hotel rooms.