A person who starts practicing poisonous snake charming after signing a contract with a health insurance company is an example of
A) moral hazard.
B) adverse selection.
C) signaling.
D) screening.
A
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When a Pigouvian tax is imposed, ________
A) the marginal private cost curve shifts upward B) the demand curve shifts rightward C) the marginal social cost curve shifts downward D) the marginal social benefit curve shifts downward
Optimal commodity taxation would
A. put a tax on leisure time, which is currently untaxed. B. have the smallest amount of excess burden possible for a given amount of tax revenue. C. optimize tax rates on the wealthiest Americans. D. eliminate tax evasion in the United States.
Innovation creates the opportunity to:
A. quickly exit industries. B. lose money spent on research and development. C. earn positive economic profits. D. sustain zero economic profits in a single industry in the long run.
One problem with keeping the CPI basket fixed is it:
A. doesn't accurately isolate price changes from behavior changes. B. doesn't allow for changes in people's preferences over time. C. can't properly predict when prices will change. D. doesn’t really capture what a typical household may purchase in a base year.