Homework Answers
"B"
Moral hazard. A lazy worker who is trying to pass as a hard working person is morally wrong. A firm trying to avoid this is trying to avoid moral hazard.
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Firms that seek to avoid hiring lazy workers that assert they are hardworking are trying to...
Individuals with homeowner’s insurance tend to be more forgetful about locking their possessions safely before heading...
Individuals with homeowner’s insurance tend to be more forgetful about locking their possessions safely before heading out. This is an example of a. Adverse selection b. Moral hazard c. Screening d. None of the above
- LEE 1093 equity contracts is a particular type of content called the problem. A) adverse...
- LEE 1093 equity contracts is a particular type of content called the problem. A) adverse selection; principal-agent B) moral hazard; principal-agent C) adverse selection; free-rider mo D) moral hazard; free-rider 9ms nie and soon.3DIOHD H IITIUM o d bratobru ovllnoiloup or Wents on linolars of bobol i tad voor 1. L: L
1.Consider an industry with only two firms that produce identical products. Each of the firms only...
1.Consider an industry with only two firms that produce identical products. Each of the firms only incurs a fixed cost of $1000 to produce and marginal cost is 20. The market demand function is as follows: Q=q1+q2=400-P a. Assuming that the firms form a cartel, calculate the profit-maximizing quantity of output, price and profits b. If the firms choose to behave as in the Cournot model, what would be the profit- maximizing quantities of output, price and profits? c. if...
2a.) Firms hiring lobbyists to keep out new entrants and avoid competition is an example of:...
2a.) Firms hiring lobbyists to keep out new entrants and avoid competition is an example of: A. rent seeking. B. enforcing a free market. C. regulatory restrictions. D. economies of scale. 2b.) A trigger strategy is a strategy that: A. depends on an opponent's past decisions. B. is not relevant to oligopolies. C. tells a business to leave the industry because the price is below the AVC. D. determines when to enter an industry. 2c.) A trigger strategy is a...
1) A borrower who takes out a loan usually has better information about the potential returns...
1) A borrower who takes out a loan usually has better
information about the potential returns and risk of the investment
projects he plans to undertake than does the lender. This
inequality of information is called
A) moral hazard.
B) asymmetric information. C) noncollateralized risk. D)
adverse selection.
2) If bad credit risks are the ones who most actively seek
loans then financial intermediaries face the problem of
A) moral hazard.
B) adverse selection.
C) free-riding.
D) costly state verification....
When hurricanes approach, Shamari never prepares her house, stating "I'm insured." Shamari's behavior is an example...
When hurricanes approach, Shamari never prepares her house, stating "I'm insured." Shamari's behavior is an example of Select one: a. adverse selection. b. common ownership. C. social regulation. d. private property rights. e. moral hazard. O
A health insurance company knows that there are two types of customers (smokers and non-smokers), each...
A health insurance company knows that there are two types of customers (smokers and non-smokers), each facing different health risks. The probabilities of getting sick and the healthcare costs in the case of illness for the two customer types is given in the table below. Group Healthcare costs Probability of getting sick Smokers $1200 50% Non-smokers $1200 20% Assume that each customer has a monthly income of $1600 and has a utility function given by U(x)=sqrt(x), where x is the...
Debt deflation occurs when A) corporations pay back their loans before the scheduled maturity date. B)...
Debt deflation occurs when A) corporations pay back their loans before the scheduled maturity date. B) an economic downturn causes the price level to fall and a deterioration in firms' net worth because of the increased burden of indebtedness. C) lenders reduce their lending due to declining stock prices (equity deflation) that lowers the value of collateral. D) rising interest rates worsen adverse selection and moral hazard problems.
C Date: Class (First Pagr) Date: Class (Subsrquent Pagrs) If you are risk avene a. You value a lo...
c Date: Class (First Pagr) Date: Class (Subsrquent Pagrs) If you are risk avene a. You value a lohery a moee than is expected value. b You ike to uke gambles. c. A loaery is worth kess to you than iks expected vaue d You advertise your anihude twward risk. When farmers sell forward contracts in spring for the harvest they will reap in Autumn a. Their planting decisions are riskier due to increased uncertainy b They accrpt a price...
9. The strategy of reducing or eliminating risks by13. Tax taking a small share in many...
9. The strategy of reducing or eliminating risks by13. Tax taking a small share in many independent events or by A) who writes the check to the government taking advantage of the predictability associated with B) who really pays the tax. large numbers of independent events is known as: A) floating. B) specializing. C) pooling. D) screening. incidence refers to: C) the deadweight loss from the tax. D) the total revenue that the government collects from the tax 14. An...
- LEE 1093 equity contracts is a particular type of content called the problem. A) adverse selection; principal-agent B) moral hazard; principal-agent C) adverse selection; free-rider mo D) moral hazard; free-rider 9ms nie and soon.3DIOHD H IITIUM o d bratobru ovllnoiloup or Wents on linolars of bobol i tad voor 1. L: L
1) A borrower who takes out a loan usually has better
information about the potential returns and risk of the investment
projects he plans to undertake than does the lender. This
inequality of information is called
A) moral hazard.
B) asymmetric information. C) noncollateralized risk. D)
adverse selection.
2) If bad credit risks are the ones who most actively seek
loans then financial intermediaries face the problem of
A) moral hazard.
B) adverse selection.
C) free-riding.
D) costly state verification....
When hurricanes approach, Shamari never prepares her house, stating "I'm insured." Shamari's behavior is an example of Select one: a. adverse selection. b. common ownership. C. social regulation. d. private property rights. e. moral hazard. O
c Date: Class (First Pagr) Date: Class (Subsrquent Pagrs) If you are risk avene a. You value a lohery a moee than is expected value. b You ike to uke gambles. c. A loaery is worth kess to you than iks expected vaue d You advertise your anihude twward risk. When farmers sell forward contracts in spring for the harvest they will reap in Autumn a. Their planting decisions are riskier due to increased uncertainy b They accrpt a price...
9. The strategy of reducing or eliminating risks by13. Tax taking a small share in many independent events or by A) who writes the check to the government taking advantage of the predictability associated with B) who really pays the tax. large numbers of independent events is known as: A) floating. B) specializing. C) pooling. D) screening. incidence refers to: C) the deadweight loss from the tax. D) the total revenue that the government collects from the tax 14. An...
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