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PART 1: Classify each of the following scenarios as an example of adverse selection or moral hazard. Be sure to support your answer!
1. Nordstromâ€TMs cannot predict who is going to be a good shoe salesperson.
2. A health insurance policy that has no deductibles and unlimited use of chiropractic visits is used to the maximum allowed by some patients.
3. Poor drivers seek out car insurance more than good drivers do.
4. Airline companies offer an expensive ticket that allows you to fly immediately and a lower-priced ticket with more flexible use.
5. CEOs shirk and do not maximize the companyâ€TMs profits.
PART 2: Discuss why, if most people are risk-averse, they gamble. What do YOU think?
Also, please post at least two comments to your fellow classmates.
smaller multiplier means that change in government purchases of goods and services, government transfers, or taxes necessary to close an inflationary or recessionary gap is larger. How can you explain this apparent inconsistency.
Illustrate what economic decision makers determine the demand for labor. What is their goal, and what decision criteria do they use in trying to reach that goal.
What would be additional effects follow from this initial effect. What is the total effect of the tax cut on aggregate demand.
The five basi modes of transportation have been available for well over 50 years. Is this the way it will be always be, or can you identify a sixth mode that may become economically feasible in the foreseeable future?
Assume that a industry produces 200000 units a year and sells m all for $10 each. Furthermore, assume that marginal external damage of this product is $6 per unit. How many more units of this product will free market produce than is socially.
If government imposes a $5 specific tax to be collected from sellers, what is the price consumers will pay. Explain how much tax revenue is collected.
Draw a pair of utility curves, one for X and one for Y, and label the positions immediately after the innovation (before any migration) as x for city X and y for city Y. Use arrows along the curves to indicate that migration that follows.
Illustrate what do laws of supply and demand predict would be result of an immediate removal of minimum wage in terms of price of labour and quantity available.
Some say which we should propose an amendment to the U.S. Constitution which would need a balancing the federal budget
The financial writer Andrew Tobias described an incident that occurred when he was a student at the Harvard Business School
Describe the short-run impact of the adverse supply shock on prices and output in each country. Compare the long-run impact of the adverse supply shock on prices and output in each country.
Explain by how much would it have to increase government purchase to achieve this goal.
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