Answer with a 1: not a problem of information asymmetry, 2: moral hazard, or 3: adverse selection a. Unrest in the Middle East causes oil speculators to buy up oil futures, driving gasoline prices higher. b. Karol is halfway to work before he realizes that he forgot to lock the back door. Because he has renter’s insurance, he decides it is not worth being late to work just to go home to lock the door. c. Joanne applies for a job as a part-time manager at a fast-food restaurant. Her MBA makes her incredibly overqualified for the job, yet the position goes to someone else who doesn’t even have a college degree. d. Frances lives in an apartment above a restaurant, and her apartment always smells like burgers and fries. She has tried unsuccessfully to get the restaurant owner to remedy the problem. e. The potential costs of long-term care (such as a nursing home stay) can be very high and are also very uncertain. Despite this, the private market for long-term care in the United States has remained fairly small.
Answer with a 1: not a problem of information asymmetry, 2: moral hazard, or 3: adverse selection
a. Unrest in the Middle East causes oil speculators to buy up oil futures, driving gasoline prices higher.
b. Karol is halfway to work before he realizes that he forgot to lock the back door. Because he has renter’s insurance, he decides it is not worth being late to work just to go home to lock the door.
c. Joanne applies for a job as a part-time manager at a fast-food restaurant. Her MBA makes her incredibly overqualified for the job, yet the position goes to someone else who doesn’t even have a college degree.
d. Frances lives in an apartment above a restaurant, and her apartment always smells like burgers and fries. She has tried unsuccessfully to get the restaurant owner to remedy the problem.
e. The potential costs of long-term care (such as a nursing home stay) can be very high and are also very uncertain. Despite this, the private market for long-term care in the United States has remained fairly small.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
