Microeconomics, Student Value Edition (2nd Edition)
2nd Edition
ISBN: 9780134461786
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 16, Problem 4P
To determine
Why peaches will be inspected and sold at
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Identify each of the following as an adverse selection or a moral hazard problema. A person with car insurance fails to lock his car doors when he shops at a mall.b. A person with a family history of cancer purchases the most complete health coverage available.c. A person with health insurance takes more risks on the ski slopes of Aspen than he would without health insurance.d. A college professor receives tenure (assurance of permanent employment) from her employer.e. A patient pays his surgeon before she performs the surgery.
Cyclists travel faster on their bicycles when wearing helmets. Is this an example of adverse selection or moral hazard? Explain your answer.
The government can help solve the problem of adverse selection in each of these ways EXCEPT:
a.
reducing the need for insurance.
b.
requiring that everyone buy insurance.
c.
providing incentives for buyers to reveal private information.
d.
providing insurance.
Chapter 16 Solutions
Microeconomics, Student Value Edition (2nd Edition)
Knowledge Booster
Similar questions
- Suppose that there is asymmetric information in the market for used cars. Sellers know the quality of the car that they are selling, but buyers do not. Buyers know that there is a 30% chance of getting a "lemon", a low quality used car. A high quality used car is worth $30,000, and a low quality used car is worth $15,000. Based on this probability, the most that a buyer would be willing to pay for a used car is $___arrow_forwardDifferentiate between adverse selection and moral hazard problems with one examplesarrow_forwardWhich of the following is an example of adverse selection? Overgrazing of a common piece of land A passenger traveling in a subway without a ticket A customer buying a defective appliance from a used goods market The generation of hazardous waste by the production of a goodarrow_forward
- Assume that the market for lemons has unraveled. Who is harmed by the existence of asymmetric information? Who is helped?arrow_forwardWhich one is not true about the private insurance market Only the frail customers are insured fully and much of the population is underinsured Under certain conditions can lead to uninsurance for everyone Maximizes government involvement Maximizes adverse selectionarrow_forwardDistinguish between adverse selection and moral hazard as they relate to the insurance industry.arrow_forward
- Adverse selection in insurance business means that those__________ likely to get _________insurance benefits want to purchase insurance the most. Group of answer choices most; large least; small least; large most; small not; anyarrow_forwardThe used car market can become a “lemon” market, where sellers of poor quality used cars will stay in the market, while sellers of good quality used cars will exit the market. Why is this happening? Is this adverse selection or moral hazard? Give an argumentarrow_forwardDistinguish the difference between adverse selection and moral hazard.arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning