Example of adverse selection

Assignment Help Business Economics
Reference no: EM13976358

Which of the following is an example of adverse selection?

A safe driver taking greater risk in a rental car than his own car.

A terminally ill person purchasing life insurance.

An employment contract encourages little effort on the part of employees.

All of the above

Reference no: EM13976358

Questions Cloud

A large firm has two divisions : A large firm has two divisions: an upstream division that is a monopoly supplier of an input whose only market is the downstream division that produces the final output. To produce one unit of the final output, the downstream division requires one un..
Discuss both moral hazard and adverse selection issues : Your product fails about 2% of the time, on average. Some customers purchase the extended warranty you offer in which you will replace the product if it fails. Would you want to price the extended warranty at 2% of the product price? Discuss both mor..
Determine the optimal two-part pricing strategy : You are the manager of a monopoly. A typical consumer's inverse demand function for your firm's product is P = 250 − 40Q, and your cost function is C(Q) = 10Q. Determine the optimal two-part pricing strategy. How much additional profit do you earn us..
Describes the changes in inflation and in unemployment : The Case in Point titled “Some Reflections on the 1970s” describes the changes in inflation and in unemployment in 1970 and 1971 as a watershed development for macroeconomic thought. Why was an increase in unemployment such a significant event?
Example of adverse selection : Which of the following is an example of adverse selection?
What is the per-worker production function : Consider an economy described by the production function: Y=F(K,L)=K ^(.4) L^(.6). What is the per-worker production function? Assuming no population growth or technological progress, find the steady state capital stock per worker, output per worker,..
Suppose that the monetary base increases : Suppose that the monetary base increases by $400 billion. If the money multiplier equals 2.75, the money supplies:
Which is a screen against adverse selection : Which is a screen against adverse selection?
Would you consider walmark to me a monophony : Walmart has had many problem with it's work force over health insurance, forming a union etc. Would you consider walmark to me a monophony? Explain why and why not. What impact will having a union have on the workers and on Walmart.

Reviews

Write a Review

Business Economics Questions & Answers

  Ilustrate what is the market price and level of each firm

Ilustrate what is the market price and level of each firm's output in the short run. How much profit does each firm make.

  Important determinants of the demand for workstations

Important determinants of the demand for workstations and must therefore be included in the study. How would you respond to this implication.

  Service depends upon the relative supply and demand

"Which side of the market, supply or demand, that bears the burden of a tax on a good or service depends upon the relative supply and demand:"

  Technology improvement is expected in future machines

If the firm needs the service of these machines for an indefinite period also no technology improvement is expected in future machines.

  Calculate the deadweight loss

Suppose the demand and supply for wine within the U.S. is: Suppose the demand and supply for wine in the rest of the world (R.O.W.) is: Calculate the deadweight loss if the U.S. imposes a tariff of 25 cents per bottle of imported wine.

  Q assume that capital goods are on the vertical axis of a

q. assume that capital goods are on the vertical axis of a production possibilities graph and that consumer goods are

  Net exports-government taxes minus transfers-personal saving

The following is information from the national income accounts for a hypothetical country: Net exports? Government taxes minus transfers? Disposable personal income? Personal saving?

  Producing level of output at which demand is inelastic

If a monopolist is producing a level of output at which demand is inelastic, the firm is not maximizing profits, and increasing output will decrease total revenue.

  Terminating of a pension in bankruptcy

If a company or municipality requests the terminating of a pension in bankruptcy, the court first has to determine that the company/municipality is otherwise insolvent. The company/municipality does not get to decide that for themselves, and they do ..

  Liberal economics and conservative economics

Distinguish between liberal economics and conservative economics. Why is macroeconomics an inherently political subject? Summarize the problems that can be created by rapid inflation. How can inflation become self-perpetuating?

  What is the opportunity cost of the last pound of chocolate

Assume you have $10 to spend on either apples or chocolate. The price of a pound of apples is $3/pound and the price of chocolate is $5/pound. Graph the consumption possibilities curve. What is the opportunity cost of the 1st pound of chocolate? What..

  If interest rates could be deducted from income

If interest rates could be deducted from income, would an investor change his/her decision based on question 1.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd