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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?
If taxes were cut by $1.5 trillion and the MPC was 0.85, by how much would total spending
What is adverse selection? How do these two concepts relate to the market for insurance and healthcare?
Elucidate the multiplier concept as it applies in this case. Illustrate what are the qualifications and limitations of the multiplier model.
Calculate the percentage change in nominal GDP, real GDP, and the GDP deáator in 2006 and 2007 from the preceding year. For each year, identify the variable that does not change. Explain in words why your answer makes sense.
Illustrate what do you think would be the short-run impact on the firm's production.
Both the traditional Keynesian theory and the new Keynesian theory indicate that the short-run aggregate supply curve is horizontal. Tasks: Answer the following questions: ? Is there any difference between the two approaches of the Keynesian theory a..
In 2004, Congressman Dennis Kucinich proposed the Free Market Drug Act. This legislation would have removed patent protection on drugs developed with public funds and given control over pharmaceutical R&D to the National Institutes of Health (NIH). E..
Solve for the amount imported, consumer surplus, and producer surplus. Suppose a per unit tariff of $64 is imposed by the government. Solve for the consumer surplus, producer surplus, government revenue and total surplus with the tariff.
Suppose firm sets an entry fee plus per-unit price for each consume. It can tailor entry fee and per-unit price to individual consumer. Illustrate what are best (profit-maximizing) entry fees and per-unit prices for it to set. Illustrate what is t..
Use Porter’s five forces model to analyze the competitive environment of a country of your choice (pick a product category that you are familiar with). How does a market orientation explain entry into that market? A resource-based view? Why are both ..
q1. consider a monopsony employer in a labour market. elucidate explain how a union in this labour market might
Use the sticky wage theory of aggregate supply to explain what will happen to output and the price level in the long run. What role does expected price level play in the adjustment?
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