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Because credit card companies and banks must charge the same interest rate on credit cards to all borrowers, there is an adverse selection problem with credit cards. How does a credit card company or firm know whether a person will be a high-quality borrower (i.e., one who pays the debts) or a lower-quality borrower (i.e., one who does not pay debts)?
Describe
a. how the restrictions of a single rate leads to an adverse selection problem, and
b. at least two potential means that credit card companies can use to try to lessen this problem.
you have been part of the orthopedic center for 5 years. in that time you have seen the center grow and the need for
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How might you determine whether flute-playing ability is a highly heritable trait? If you want to improve your flute playing and someone tells you that musical ability is heritable, should you stop practicing?
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Consider a Bertrand model in which the above firms choose prices to post P_A and P_B simultaneously. Since the goods are identical, consumers will go to the firm with the cheaper price.
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