A pharmaceutical company faces a price regulation where it cannot charge any higher than $5,000 for a lifesaving drug. The company knows that the patients put a high value on this product and are willing to pay up to $10,000 for it. The company decides to sell the drug together with periodic blood testing for $10,000 . This is an example of
a. Tying
b. Bundling
c. Fraud, the company is not allowed to sell for any higher than the regulatory pric
d. Both A&B
b
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All of the following are true regarding moral hazard except which one?
A) It arises when parties to a transaction have conflicting objectives and the supervising parties cannot monitor the other parties. B) It typically occurs after participants have already entered into a contract or agreement. C) It is a situation in which individuals make hidden actions that benefit them at the expense of the other parties. D) Situations of moral hazard tend to be rare occurrences.
A widget costs $1000 in the US and CAD$1200 in Canada. The current exchange rate is 1USD=1.09CAD. At this rate,
a. The good costs more in the US b. The good costs more in Canada c. The good costs the same across the two countries d. None of the above
In a market economy, government decides the answers to the three economic decisions
a. True b. False Indicate whether the statement is true or false
The maximin criterion seeks to minimize the maximum payoffs in order to win.
Answer the following statement true (T) or false (F)