Which of the following is not an example of the adverse selection problem?
A. Buyers in a market for used cars must choose from an undesirable selection of used cars.
B. An insurance company must choose one price for its coverage for both high-cost and low-cost people.
C. Commercial banks would rather use credit rationing than raising interest rates in the presence of excess demand for loans.
D. An insured motorist drives more recklessly.
Answer: D
You might also like to view...
The export of wheat will be included in the calculation of GDP using the ________ method
A) income B) expenditure C) investment D) production
Assume that one of two possible outcomes will follow a decision. One outcome yields a $75 payoff and has a probability of 0.3; the other outcome has a $125 payoff and has a probability of 0.7. In this case the expected value is
A) $85. B) $60. C) $110. D) $35.
One way to solve the problems caused by information asymmetry is:
A. surfing. B. signaling. C. proofing. D. All of these are solutions to information asymmetry.
According to the graph shown, what does P on the y-axis stand for?
A. Price of GDP B. Inflation rate C. Average price level D. Price of Y