EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Question
Chapter 18, Problem 8SP
(a):
To determine
Type of asymmetric information problem with scalped concert ticket.
(b):
To determine
Type of asymmetric information problem with contractor.
(c):
To determine
Type of asymmetric information problem with neighborhood teenager.
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Students have asked these similar questions
If the theory of moral hazard is correct, how would you expect the gains in insurance coverage to affect health behaviors such as smoking, drinking, exercise, and healthy eating habits? What would explain why moral hazard MIGHT NOT occur after the large gains in health insurance coverage?
What are moral hazard and adverse selection?
How are they similar, how are they different? What causes each?
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 18 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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Similar questions
- The difference between moral hazard and adverse selection is a. moral hazard has to do with unobservable characteristics of individuals b. moral hazard has to do with unobservable actions of individuals c. adverse selection is when individuals change their behaviors because of a contract d. adverse selection is when you choose the wrong answer on a testarrow_forwardAll MegaCorp employees who stay on the job for more than three years are rewarded with a 10 percent pay increase and coverage under a private health insurance plan that MegaCorp pays for. Tina just passed three years as a MegaCorp employee and reacts to having health insurance by taking up several dangerous sports because now she knows that the insurance plan will pay for any injuries that she may sustain. This change in Tina’s behavior is known as: a. Defensive medicine. b. Asymmetric information. c. The moral hazard problem. d. The personal mandate.arrow_forwardWhat are adverse selection and moral hazard?arrow_forward
- 25. Which of the following is the best example of a moral hazard problem? Question 25 options: a) A borrower uses the proceeds of a business loan to gamble at a Las Vegas casino. b) A borrower decides to borrow at a fixed rather than a variable interest rate. c) A bank has difficulty in distinguishing between good and bad credit risks. d) A borrower makes all of her payments despite a downturn in her business.arrow_forwardHow 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_forwardBriefly explain how the moral hazard problem can affect equity finance. What could be the solution to it? Briefly explain how the moral hazard problem can affect debt finance. What could be the solution to it?arrow_forward
- How might adverse selection make it difficult for an insurance market to operate?arrow_forwardAdverse selection is good ? like the The Affordable Care Act (Obamacare) deals with the problem of adverse selection by using the power of the government to fine individuals who do not sign up for health insurance. do you think it brings benefits or not ?arrow_forwardIn the context of asymmetric information, adverse selection and moral hazard, how does marketFailure occur? (Make reference to the insurance or financial market)arrow_forward
- Determine which moral standard of social responsibility the business is observing. Earl's company wants to change the material it uses for its products to a cheaper, less-durable material. Processing the material causes more waste and the final products will not be as safe for customers, but the company will make more money overall. A. Moral Minimum Standard B. Profit-Maximizing Moral Standard C. Stakeholder Theory Moral Standard D. Indeterminable E. Corporate Citizenship Moral Standardarrow_forwardSuppose an individual saves as precaution against adverse events, like unemployment. This is an example of a-adverse selection b-self-insurance c-adverse saving d-moral hazardarrow_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_forward
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