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.
You might also like to view...
New airplanes, which normally consume less fuel per passenger-mile, become less efficient for commercial airlines to purchase and use as
A) average flight distances lengthen. B) fewer non-stop flights are scheduled. C) fuel prices fall. D) the demand for airline travel increases. E) the price of new airplanes falls.
When can a seller's investment in reducing transaction cost increase the price of the product to customers but still leave them better off?
If a country had a real GDP of $500 million, and the GDP Ddeflator was 90, what is the nominal GDP?
a. $440 million b. $540 million c. $450 million d. $550 billion
Which of the above diagrams illustrate(s) the effect of an increase in automobile worker wages on the market for automobiles?
A. A only. B. B only. C. C only. D. D only.