A key problem facing insurance companies is that people know more about their own health than do insurance companies, and that those people who are seriously ill are the ones most likely to want to obtain health insurance. This phenomenon is called
A) adverse selection.
B) asymmetric information.
C) moral hazard.
D) a premium death spiral.
B
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Federal subsidies to higher education have the effect of
a. increasing the number of people seeking higher education and lowering tuition b. increasing the number of people seeking higher education and raising tuition c. decreasing the number of people seeking higher education and lowering tuition d. decreasing the number of people seeking higher education and raising tuition
The size of a tax and the deadweight loss that results from the tax are
a. positively related. b. negatively related. c. independent of each other. d. equal to each other.
Justin and Maria work at a restaurant. Justin can make either 10 pancakes or 4 waffles; Maria can make either 8 pancakes or 2 waffles. According to this scenario, the opportunity cost of making one waffle for Maria is
A. 1/4 pancake. B. 4 pancakes. C. 2/5 pancake. D. 2 1/2 pancakes.
The elasticity of demand for gasoline is likely to be
A. small and shrink as time goes by. B. small, but grow as time goes by. C. large and shrink as time goes by. D. large and grow as time goes by.