The classic example used to discuss the problem of adverse selection is:
A. fruit and produce markets, such as lemons.
B. workers who shirk when their effort isn’t closely monitored.
C. the imbalance of information that exists between a buyer and seller of a used car.
D. drivers with insurance who tend to drive more recklessly.
C. the imbalance of information that exists between a buyer and seller of a used car.
You might also like to view...
Income mobility is:
A. how much income is stored in offshore banks. B. the ability to improve one's economic circumstances over time. C. how likely the income associated with each job in the country will change in relative terms. D. how likely the income associated with each job in the country will increase over time.
According to cost-benefit analysis, a government project should be undertaken as long as the
A. Voters approve the project. B. Opportunity costs exceed the welfare benefits. C. Benefits exceed the opportunity costs. D. Benefits equal the costs.
In the classical model, an increase in aggregate demand will lead to an increase in wage rates while a decrease in aggregate demand will
A. leave wages unchanged since workers will not take a cut in pay. B. increase wages since business will be desperate for labor. C. decrease wages. D. change the price of capital.
Short-term price swings for farm products are partially the result of
A. The high income elasticity of food demand. B. Time lags between the production decision and the resultant harvest. C. Producers acting collectively to bid up prices. D. The high price elasticity of food demand.