What is "adverse selection"?
What will be an ideal response?
A situation in which the risk associated with the existence of asymmetric information causes one party not to enter into a contractual relationship with another party.
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Producers of tablet computers will be able to lower the wage rate that they pay to their workers. You are asked to predict the effects on the supply of tablet computers, and the price of a tablet computer. You predict that the supply curve shifts
A) rightward, and the price is constant. B) leftward, and the price is constant. C) rightward, and the price falls. D) leftward, and the price rises.
Capital inflow restrictions
A) receive less support from economists than full capital controls. B) may lessen domestic lending booms and risk-taking by domestic banks. C) were imposed in the United States during the late 1990s. D) were imposed in Europe in May 2000.
Patents allow manufacturers to block the entry of new firms into an industry through
a. infringement suits b. economies of scale c. limit pricing d. price discrimination e. a government franchise
The demand curve facing a monopolist is
A. horizontal at the market price. B. identical to the market demand curve for the good. C. exactly twice as steep as the market demand curve for the good. D. vertical because there are no competitors.