Principles of Microeconomics California Edition 2nd Edition
2nd Edition
ISBN: 9780393622089
Author: Dirk Mateer, Lee Coppock
Publisher: W. W. Norton
expand_more
expand_more
format_list_bulleted
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.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Someone indicated that employee’s absence from work despite meeting the eight hours per day requirement affect productivity and increase cost of business. If an employee makes up the hours by coming early and leaving late, how can you call it an example of moral hazard when the manager can easily correct this behavior? Please explain to the class.
What are adverse selection and moral hazard?
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?
Chapter 18 Solutions
Principles of Microeconomics California Edition 2nd Edition
Knowledge Booster
Similar questions
- Which of the following is NOT a commitment device? Select one: a. A non-refundable advance payment to reserve a room at a resort. b. A manufacturer's 2-year agreement to fix, at no cost to you, anything that breaks on your computer. c. A pre-nuptial agreement that provides for a large penalty in the event a spouse has an affair. d. High fines for illegal parking on campus.arrow_forwardHow does a police chief role as a motivator differ from the role of a sergeant?arrow_forwardRead the following article and then answer the questions that follow: Without question, the most important positive action you can take to prevent illness and disease is exercise. Exercise prevents a long list of diseases that can cause chronic or severe illness, disability, and even death, including cancer, heart disease, stroke, high blood pressure, vascular disease, diabetes, obesity, and osteoporosis. Exercise also prevents mental health illness and disease disorders, including depression, anxiety, and stress. While some of these disease processes can be reversed with exercise and healthy life-style, some cannot. Preventing them from starting is the number one goal. The most negative lifestyle behaviour is smoking. Smoking contributes to the development of almost all diseases, notably cancer, heart disease, high blood pressure, high cholesterol, diabetes, and asthma. Smoking has the following negative health effects: lowers immunity, making you more likely to get bronchitis,…arrow_forward
- How does the problem of moral hazard affect the safety of sports such as football and boxing when safety regulations started requiring that players wear more padding?arrow_forwardThe principal of a school hires Daniel to teach eighth grade students. One goal the principal has is to prepare the students to do well on standardized tests, as he will be judged based on the results of those tests. Daniel prefers to teach in a more creative way, so the students learn a lot, but perform poorly on their standardized tests. This is an example of what problem? a. Adverse hazard b. Moral hazard c. Adverse selection d. Free-ridingarrow_forwardIf you sell your DVD player on eBay you will be better informed about the quality of the product than any potential buyer. This is called A) adverse selection. B) asymmetric information. C) moral hazard. D) opportunistic behavior.arrow_forward
- George Akerloff focused the market for used cars and discussed an issue later generally called the "lemons problem." A "lemon" is a low quality used car, with the seller but not the potential buyer aware of this. Since sellers have more information about the quality of the car: a. adverse selection causes an inefficiently large number of transactions to occur. b. moral hazard causes an inefficiently large number of transactions to occur. c. moral hazard causes an inefficiently small number of transactions to occur. d. adverse selection causes an inefficiently small number of transactions to occur.arrow_forwardWhat are some strategies for reducing adverse selection in insurance markets? What sorts of problems do these solutions cause?arrow_forwardCompare and contrast the differences between moral motivation and economic motivation. What are two reasons why a person would be interested in being ethical and classify those reasons in terms of whether they represent moral motivation or economic motivation.arrow_forward
- Describe how the following facts represent solutions to problems of asymmetric information. a. Auto insurance rates are higher for teenagers than for nonteenagers. b. Your car insurance coverage probably includes a deductible—an amount that you have to pay out of pocket before your insurance coverage kicks in. c. Many states have laws like Virginia’s that give customers the right to keep or inspect parts that are removed by an auto mechanic.arrow_forwardIdentify if it is True or False.arrow_forwardWhat are moral hazard and adverse selection? How are they similar, how are they different? What causes each?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
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
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc