Insurance companies try to mitigate the problem of adverse selection by:
A. asking potential customers a seemingly endless list of questions to gain as much information as they can about the person's risk characteristics.
B. charging a higher premium to groups with similar ages or behaviors that correlate with risky behavior.
C. charge a higher price to all individuals to cover the lack of information.
D. All of these statements are true.
D. All of these statements are true.
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Consumer’s surplus is a measure of how much
A. less than his income a consumer spends on goods. B. more utility a consumer receives from his purchases than he has to pay for them. C. a consumer’s marginal utility differs from his total utility. D. a change in price induces a consumer to substitute other goods.
Consider the following information regarding a person’s decision to go to college: college tuition is $20,000 per year, room and board is $10,000 per year, and books and materials are $2,000 per year. Suppose that instead of going to college this person could have earned $18,000 working in a store. An economist would calculate the cost of going to college as
A. $20,000. B. $30,000. C. $32,000. D. $50,000. E. $18,000.
With the exception of during recessions, workers in Canada are eligible for unemployment benefits for about twice as long a period of time as workers in the United States. As a result
A) the unemployment rate in Canada is usually higher than in the United States. B) the opportunity cost of job search in Canada is lower than in the United States. C) frictional unemployment is higher, on average, in the United States than in Canada. D) the average duration of unemployment is longer in the United States than in Canada.
Refer to the figure above. The quota restricts trade by the same amount as a tariff of
A) $20. B) $30. C) $50. D) Cannot answer without more information.