Which of the following is a case of asymmetric information:

A. The buyer and seller of a used car don’t know how long the car will operate.
B. A provider of health insurance does not know whether a specific client is a smoker or not.
C. Neither you nor the insurance company has perfect information about whether a flood will occur.
D. None of the above are examples of asymmetric information.


B. A provider of health insurance does not know whether a specific client is a smoker or not.

Economics

You might also like to view...

Larry's Lathe-makers Limited produces lathes, which are purchased by furniture manufacturers all over the world. The standard lathe depreciates over a twenty-five-year period. In the national income accounts, the lathes are classified as

A) inventory. B) raw materials. C) capital goods. D) intermediate goods.

Economics

The Cobb-Douglas production function has which of the following properties?

a. output is a linear increasing function of each of the inputs b. it provides a good fit to the traditional S-shaped production function c. the elasticity of production is constant and equal to 1 minus the exponent of the appropriate variable d. all of the above e. none of the above

Economics

A special-interest issue is one that

a. allocates the cost of the activity in accordance with the benefits received. b. benefits a small, well-organized interest group at the expense of taxpayers or consumers. c. benefits everyone and imposes a cost on everyone. d. benefits a small, well-organized interest group but makes that group pay for the cost of the program.

Economics

Suppose a firm is considering producing zero units of output. We call this shutting down in the short run and exiting an industry in the long run

a. True b. False Indicate whether the statement is true or false

Economics