Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Question
Chapter 8, Problem 13QE
To determine
Explain the chance of getting a cherry change.
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20. When a moral hazard problem exists for automobile driving, the marginal cost of driving (A) is lowered, and the amount of driving done is raised above the efficient level. (B) is lowered, and the amount of driving done is lowered below the efficient level. (C) is raised, and the amount of driving done is raised above the efficient level . (D)is raised, and the amount of driving done is lowered below the efficient level. (E) is raised above the efficient level, but market forces keep the total amount of driving is kept at the efficient level .
People tend to view car travel as being safer than airplane travel, but a person is how many times more likely to die from a car accident than from an airplane crash?
How does moral hazard apply to seat belt laws and helmet laws?
Chapter 8 Solutions
Microeconomics
Ch. 8.1 - Prob. 1QCh. 8.1 - Prob. 2QCh. 8.1 - Prob. 3QCh. 8.1 - Prob. 4QCh. 8.1 - Prob. 5QCh. 8.1 - Prob. 6QCh. 8.1 - Prob. 7QCh. 8.1 - Prob. 8QCh. 8.1 - Prob. 9QCh. 8.1 - Prob. 10Q
Ch. 8.W - Prob. 1QECh. 8.W - Prob. 2QECh. 8.W - Prob. 3QECh. 8.W - Prob. 4QECh. 8.W - Prob. 5QECh. 8.W - Prob. 6QECh. 8.W - Prob. 7QECh. 8.W - Prob. 8QECh. 8.W - Prob. 9QECh. 8.W - Prob. 10QECh. 8.W - Prob. 11QECh. 8.W - Prob. 12QECh. 8.W - Prob. 13QECh. 8.W - Prob. 14QECh. 8.W - Prob. 1QAPCh. 8.W - Prob. 2QAPCh. 8.W - Prob. 3QAPCh. 8.W - Prob. 4QAPCh. 8.W - Prob. 5QAPCh. 8.W - Prob. 1IPCh. 8.W - Prob. 2IPCh. 8.W - Prob. 3IPCh. 8.W - Prob. 4IPCh. 8.W - Prob. 5IPCh. 8.W1 - Prob. 1QCh. 8.W1 - Prob. 2QCh. 8.W1 - Prob. 3QCh. 8.W1 - Prob. 4QCh. 8.W1 - Prob. 5QCh. 8.W1 - Prob. 6QCh. 8.W1 - Prob. 7QCh. 8.W1 - Prob. 8QCh. 8.W1 - Prob. 9QCh. 8.W1 - Prob. 10QCh. 8 - Prob. 1QECh. 8 - Prob. 2QECh. 8 - How would an economist likely respond to the...Ch. 8 - Prob. 4QECh. 8 - Prob. 5QECh. 8 - Prob. 6QECh. 8 - Prob. 7QECh. 8 - Prob. 8QECh. 8 - Prob. 9QECh. 8 - Prob. 10QECh. 8 - Prob. 11QECh. 8 - Prob. 12QECh. 8 - Prob. 13QECh. 8 - Prob. 14QECh. 8 - Prob. 15QECh. 8 - Prob. 16QECh. 8 - Prob. 17QECh. 8 - Prob. 18QECh. 8 - Prob. 19QECh. 8 - Prob. 20QECh. 8 - Prob. 21QECh. 8 - Prob. 22QECh. 8 - Prob. 23QECh. 8 - Prob. 24QECh. 8 - Prob. 1QAPCh. 8 - Prob. 2QAPCh. 8 - Prob. 3QAPCh. 8 - Prob. 4QAPCh. 8 - Prob. 5QAPCh. 8 - Prob. 1IPCh. 8 - Prob. 2IPCh. 8 - Prob. 3IPCh. 8 - Prob. 4IPCh. 8 - Prob. 5IPCh. 8 - Prob. 6IPCh. 8 - Prob. 7IPCh. 8 - Prob. 8IPCh. 8 - Prob. 9IPCh. 8 - Prob. 10IP
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Similar questions
- Place an “M” beside the items in the following list that describe a moral hazard problem and an “A” beside those that describe an adverse selection problem a. A person with a terminal illness buys several life insurance policies through the mail. b. A person drives carelessly because she has automobile insurance. c. A person who intends to torch his warehouse takes out a large fire insurance policy. d. A professional athlete who has a guaranteed contract fails to stay in shape during the off season. e. A woman who anticipates having a large family takes a job with a firm that offers exceptional child care benefits.arrow_forwardIdentify 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.arrow_forwardHow does asymmetric information lead to a market failure? Essayarrow_forward
- "Using the example of driving a car, explain moral hazard"arrow_forwardSince humans have two kidneys, you could sell a kidney and still live a long, healthy life. Given that there is such a demand for organs, do you think we should allow individuals to sell their organs like kidneys? Who do you anticipate would be most likely to sell their organs and who are the most likely to buy organs? Do you foresee any unintended consequences of legalizing the sale of organs?arrow_forwardDoes the United States, with one of the world's highest levels of meat consumption, have a moral responsibility to cut its meat consumption to make more grain available for export to countries whose people get most of their food by direct consumption of grain?arrow_forward
- Cyclists travel faster on their bicycles when wearing helmets. Is this an example of adverse selection or moral hazard?arrow_forwardSuppose that there are equal numbers of good and bad used cars in the market. Good used cars are worth $13,000, and bad used cars are worth $5,000. What is the average value of a used car? $arrow_forwardIn the health insurance market, moral hazard occurs when A.) chronically ill people refuse appropriate medical treatment. B.) chronically ill people buy insurance. C.) patients sue their doctor. D.) chronically ill people cannot buy insurance. E.) providers overtreat patients..arrow_forward
- Suppose an insurance company wants to charge a very healthy individual a premium of $1,200 a year for health coverage. It also wants to charge a less healthy individual a premium of $3,600 a year for health coverage. It is seeking to ascertain from any given customer information regarding his/her health by asking for several pieces of health-related information, such as doctor assessments of the person’s health, history of health-related problems, etc. The opportunity cost of a very healthy person securing a health report is $250 and the opportunity cost of a less healthy person securing a health report is $650. Of the choices below, how many reports should the company request to best ensure its paying the right premium to the right person? Reconsider the previous health insurance question. Of the choices below, which one is closest to the spread between the minimum possible number of reports and the maximum possible reports to achieve the company’s desired outcome? Reconsider again…arrow_forwardGeorge 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_forward
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