Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Chapter 16, Problem 19CTQ
You are on the board of directors of a private high school, which is hiring new tenth-grade science teachers. As you think about hiring someone for a job, what are some mechanisms you might use to overcome the problem of imperfect information?
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You are on the board of directors of a private high school, which is hiring new tenth-grade science teachers. As you think about hiring someone for a job, what are some mechanisms you might use to overcome the problem of imperfect information?
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Chapter 16 Solutions
Principles of Economics 2e
Ch. 16 - For each of the following purchases, say whether...Ch. 16 - Why is there asymmetric information in the labor...Ch. 16 - Why is it difficult to measure health outcomes?Ch. 16 - Why might it be difficult for a buyer and seller...Ch. 16 - What do economists (and used-car dealers) mean by...Ch. 16 - What are some ways a seller of goods might...Ch. 16 - What are some ways a seller of labor (that is,...Ch. 16 - What are some ways that someone looking for a loan...Ch. 16 - What is an insurance premium?Ch. 16 - In an insurance system, would you expect each...
Ch. 16 - What is an actuarially fair insurance policy?Ch. 16 - What is the problem of moral hazard?Ch. 16 - How can moral hazard lead to more costly insurance...Ch. 16 - Define deductibles, copayments, and coinsurance.Ch. 16 - How can deductibles, copayments, and coinsurance...Ch. 16 - What is the key difference between a...Ch. 16 - How might adverse selection make it difficult for...Ch. 16 - What are some of the metrics economists use to...Ch. 16 - You are on the board of directors of a private...Ch. 16 - A website offers a place for people to buy and...Ch. 16 - How do you think the problem of moral hazard might...Ch. 16 - To what sorts of customers would an insurance...Ch. 16 - Using Exercise 16.20, sketch the effects in parts...
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Similar questions
- Asymmetric information makes it hard for investors to sell securities. Banks, meaning both investment and commercial, specialize in reducing asymmetric information. What methods do they have for reducing information asymmetries? Be sure to specify if the methods are designed to reduce the problems of adverse selection or moral hazard.arrow_forwardWhat are some ways a seller of labor (that is, someone looking for a job) might reassure a possible employer who is faced with imperfect information?arrow_forwardSuppose you are applying for a mortgage loan. The loanofficer tells you that if you get the loan, the bank willkeep the house title until you pay back the loan. Which problem of asymmetric information is the bank tryingto solve?arrow_forward
- How do you think the problem of moral hazard might have affected the safety of sports such as football and boxing when safety regulations started requiring that players wear more padding?arrow_forwardWhat are three economic negatives inherent in imperfect information and what would be an alternative approach rationale for each? Thanks.arrow_forwardCompany X sells a high-quality product. Its problem is that consumers cannot differentiate company X’s product from competing, very low-quality products. What is this particular type of information asymmetry problem called? What is one way that company X can solve this problem (without relying on government policy)?arrow_forward
- What are moral hazard and adverse selection? How are they similar, how are they different? What causes each?arrow_forwardAfter a loan has been made to a borrower, what can financial intermediaries do to reduce moral hazard?arrow_forwardImagine that you own your business. Imagine further that you or your consumers face an asymmetric information problem. a) Please explain in detail what this asymmetric information problem, and who is facing it (your firm or your consumers). b) Please explain in detail how you solved this problem.arrow_forward
- What benefit do people get from the market forinsurance? What two problems impede the insurancemarket from working perfectly?arrow_forwardWhy does "adverse selection" exists in the case when a bank makes loans to individuals? Why does "moral hazard" exists in the case when a bank makes loans to individuals?arrow_forwardWhat are adverse selection and moral hazard?arrow_forward
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