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Asymmetric information is a problem in many markets, such as the used car market, the insurance markets, and the credit markets. Choose one of these three markets, and using some of the concepts you learned from this module, discuss the questions below:
What is the market response to asymmetric information? (Hint: Does Coca-Cola have an asymmetric information problem?).
What is the market response to adverse selection? (Hint: When you purchased life insurance, did you have to take a physical exam?).
What is the market response to moral hazard? (Hint: Remember last time you saw a doctor you had to pay a $30 deductable?).
Do you think that education is a "market signal" that can help companies make better economic decisions when asymmetric information exists?
What would be the market response if there was perfect information?
What performance percentage would you use to trigger executive bonuses for that year.
q.suppose the demand function for corn is qd10-2 and supply function is qs3p-5. the government is concerned that the
q1. the current market price of smith corporations 10 percent 10-year bonds is 1297.58. a 10 percent coupon interest
Calculate the present worth of the following geometric gradient series cash flow: Annual interest Rate =8.89 %, Annual cash flow increases 29% each year, The first year value is $52 and the series is 8 yrs long starting at EOY 1.
What do you think that Apple's ability to control the pricing of downloaded song is likely to change in the future.
During the third quarter of 1997, Japanese GDP was falling at an annual rate of over 11 percent. Many blamed the big increase in Japan's taxes in the spring of 1997, which was designed to balance the budget. Explain how an increase in taxes with the ..
What strategy did Alfredo/Super Sloan develop to given GM a competitive advantage over Ford, was it successful and what were some of GM biggest competitive challenges in 2000s why were they unable to meet them?
U.S. policy to increase the miles per gallon (mpg) of new cars is to mandate an average mpg for cars sold by U.S. manufacturers. In many countries within the European Union, the policy is to tax gasoline so that the price per gallon at the pump is st..
Analyze these indicators and prepare a 3-4 page report explaining the expected short impact on firms.
Tim is offered two gambles. With gamble A, he either gains $2 or loses $1 with a 50 percent probability. With gamble B, he either gains $3 or loses $2 with a 50 percent probability. Tim prefers gamble B to gamble A. What can we conclude?
Demand for phones at an on-line retailer is 5,000 per month. The annual inventory carrying rate for the retailer is 25 percent, and the retailer incurs a fixed order cost of $15,000 for each order placed with the supplier in Taiwan. How many phones s..
Draw the PPFs for A and B when they work for 4 hours. What if the OC of shirt for A? What is the OC of shirt for B? What is the OC of cake for B? Who will export shirts? Why?
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