The problem created by asymmetric information before the transaction occurs is called ________, while the problem created after the transaction occurs is called ________
A) adverse selection; moral hazard
B) moral hazard; adverse selection
C) costly state verification; free-riding
D) free-riding; costly state verification
A
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Refer to Figure 3.1. If Homer confesses to the crime and Marge does not, what is Homer's payout?
A) 1 year B) 2 years C) 7 years D) 15 years
In the short run, a perfectly competitive firm ________ make an economic profit and ________ incur an economic loss
A) might; will never B) will never; might C) might; might D) will never; will never E) will definitely; will never
If the quantity of gasoline supplied currently exceeds the quantity demanded,
A) there is a surplus of gasoline. B) gasoline is no longer a scarce good. C) the price of gasoline would tend to remain unchanged. D) all of the above are true. E) none of the above is true.
Generating electricity creates air pollution. This industry, if left unregulated, will produce
A) more than the efficient level of output. B) the efficient level of output. C) less than the efficient level of output. D) sometimes more and sometimes less than the efficient level of output.