Which of the following statements is NOT correct? Question 3 options: Asymmetric information may lead to the disappearance of a market. Information plays an important role in the economy. There are no solutions to reduce the impact of adverse selection. It is always desirable to have more information than the person one is trading with.
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- What are three economic negatives inherent in imperfect information and what would be an alternative approach rationale for each? Thanks.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.Which describes a situation with information symmetry? None of the above. The seller knows more about the true value and price of a product than the buyer The buyer and seller both know the true value and price or a product, but the buyer lacks sufficient funds to buy it All of the above. The sellers lack sufficient funds to produce a product, even when buyers are willing and able to purchase it
- QUESTION 48 A recent study demonstrated that when states pass laws mandating that health insurance cover treatment for alcoholism, alcoholism rates in the state as well as alcohol related medical issues and drunk driving increase significantly. This is an example of: A. Adverse selection B. Risk spreading C. Moral hazard D. OpportunismYou have just received a report suggesting that a chemical your company uses in its manufacturing process is very dangerous. You have not read the report, but you are generally aware of its contents. You believe that the chemical can be replaced fairly easily but that if word gets out, panic may set in among employees and community members. A reporter asks if you have seen the report, and you say no. Is your behavior right or wrong? Explain.Suppose the equilibrium price for good quality used cars is $20,000. And the equilibrium price for poor quality used cars is $10,000. Assume a potential used car buyer has imperfect information as to the condition of any given used car. Assume this potential buyer believes the probability a given used car is good quality is .60 and the probability a given used car is low quality is .40. Assume the seller has perfect information on all cars in inventory. How does the informational imbalance result in market failure? a. Only good quality cars are sold, hence the market under-provides used cars. b. Both poor and good quality cars are sold, hence the market over-provides used cars. c. Only poor quality cars are sold, hence the market under-provides used cars. d. Both poor and good quality cars are sold, hence the market efficiently provides used cars.
- Which characteristic is being displayed when you consider all sides of an issue ? Select one : a . Knowledge b . Objectivity c . Expertise d . Honest e . Audience awareness To establish credibility with your audience , you should select one : a . Impress them with a long list of your accomplishments. b . use hedging words ( "may ," " perhaps " ) to demonstrate you're willing to tell your audience what they want to hear . c . be modest and deferential . d . show that you are confident and that you believe in yourself and in your messageQUESTION 8 Kelly and Shawn are both looking to sell their own car. Both cars are exactly the same and are in good condition. However, Kelly's car has a road worthy certificate whereas Shawn's car does not. Select the item from the list provided to make the following statements true. ✓ Kelly's car's road worthy certificate signals to buyers that the car 1. adverse selection is safe and functioning properly. This is an example of 2. trust ✓ A buyer will have to rely on such signal because of ✓ Kelly asked her brother, Thomas to help her sell her car instead. Kelly intends to sell the car for $12,000 in one months time and will give $1,000 to Thomas as commission. However, Thomas proceed to wait for 3 month so that he could sell the car for $13,000 and take in the extra cash for himself. This is an example of 3. asymmetric information 4. marginal benefit 5. principal-agent problem 6. expected value 7. risk loving 8. costly to fake principle 9. risk neutral 10, moral hazard 11, marginal…My answer is wrong The answer:adverse selection causes an inefficiently large number of transactions to occur. is wrong!!!
- Which of these is not an example of a sunk cost that is subject to poor economic decision making? a registration fee for a local 10K race A. B. C. A. D. a new laptop that you purchased for school Which of these is the best example of a framing bias? B. C. D. A. B. C. hotels that offer discounts only if you are members of certain clubs or organizations. A company specializing in foreign language lessons sells one set of lessons for $199, but all five sets of lessons purchased upfront sell for $499, a discount of nearly 50%. The company is offering this large discount in hopes that its consumers experience: D. tuition that you paid for an economics course A. an appraisal fee to determine the value of a house you are thinking of buying C. restaurants that add an automatic 18% gratuity for large groups. D. stores that advertise a low price for a specific item but do not have any left in stock. airlines that advertise low airfare but then add fees for checked bags and seat assignments. a…How might imperfect information impact price? Group of answer choices Because buyers cannot determine the true quality of a product, they might tend to bid up the prices. Because they might not be able to present all the information about a product, sellers might temporarily lower the price to make potential buyers think the product is of excellent quality. Imperfect information might tend to cause prices to be perfectly elastic. Buyers cannot distinguish which goods have a higher quality and might be less likely to pay higher prices for that good.Put yourself in the shoes of the Egyptian Government. The country is already suffering from severe water shortages. In the future, the number of people needing water is going up drastically and the amount of water available will decrease once the dam in Ethiopia is finished. What actions does the government have available? Come up with three options. Discuss the cost/benefits or pros/cons of each option. Evaluate the options and determine which one would be the best for the people of Egypt and their security.