3. Warranties in the used car market the problem of private thereby causing the price of information good and bad used cars to A. magnify; be the same B. reduce; be the same C. reduce; differ D. magnify; differ E. None of the above answers is correct because warranties have nothing to do with private information.

3. Warranties in the used car market the problem of private thereby causing the price of information good and bad used cars to A. magnify; be the same B. reduce; be the same C. reduce; differ D. magnify; differ E. None of the above answers is correct because warranties have nothing to do with private information.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter16: Information, Risk, And Insurance

Section: Chapter Questions

Problem 20CTQ: A website offers a place for people to buy and sell emeralds, but information about emeralds can be...

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Define deductibles, copayments, and coinsurance.
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True or False: Most used cars have a full warranty. O True O False
What is the problem of moral hazard?
How can deductibles, copayments, and coinsurance reduce moral hazard?
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In the used car market with warranties, the equilibrium is a and there is A.) pooling equilibrium; inefficiency, partly because of oversupply of good cars B.) pooling equilibrium; inefficiency, partly because of oversupply of lemons (poor quality used cars) C.) separating equilibrium; inefficiency, partly because of oversupply of lemons (poor quality used cars) D.) separating equilibrium; no inefficiency E.) pooling equilibrium; no inefficiency