Which of the following is the best example of an adverse selection problem?
A. When a firm pollutes the air, families living nearby suffer the consequences.
B. Once individuals are insured, they are less likely to take efficient precautions.
C. Individuals are unlikely to pay for something if they can receive the benefits for free.
D. Individuals who seek to purchase health insurance have better information about their health than do insurance companies.
Answer: D
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Refer to the figure below. At the original market equilibrium: 
A. 40 cups are sold per hour at a price of $2.00 each. B. 50 cups are sold per hour at a price of $2.50 each. C. 50 cups are sold per hour at a price of $1.00 each. D. 60 cups are sold per hour at a price of $1.50 each.
A market for a product for which demanders are willing to pay more than costs of production may not arise because of:
a. high transactions costs. b. strict price controls. c. the inability of producers to gain economies of scale. d. foreign countries dominating a domestic market for a product.
If Japan imposes a quota on imports of rice, the effect will be
a. less rice and higher price in Japan, lower rice prices in exporting countries. b. more rice and higher price in Japan, higher rice prices in exporting countries. c. less rice and lower price in Japan, higher rice prices in exporting countries. d. more rice and lower price in Japan, lower rice prices in exporting countries. e. less rice and higher price in Japan, higher rice prices in exporting countries.
Imagine that the federal government increases the minimum wage over the 2014 level. How would this action affect the graph?
a. WMIN would go lower, thereby increasing the labor surplus.
b. WMIN would go lower, thereby decreasing the labor surplus.
c. WMIN would go higher, thereby increasing the labor surplus.
d. WMIN would go higher, thereby decreasing the labor surplus.