Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 30.5, Problem 3ST
To determine
Example of moral hazard.
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Provide an example of Moral Hazard from personal observation or experience.
Adverse selection occurs because of
A) spreading of risks. B) diminishing marginal utility.
C) of imperfect information. D) moral hazard
A government policy aimed at protecting people against the risk of adverse events is called
Chapter 30 Solutions
Economics (MindTap Course List)
Ch. 30.1 - Prob. 1STCh. 30.1 - Prob. 2STCh. 30.2 - Prob. 1STCh. 30.2 - Prob. 2STCh. 30.2 - Prob. 3STCh. 30.2 - Prob. 4STCh. 30.3 - Prob. 1STCh. 30.3 - Prob. 2STCh. 30.3 - Prob. 3STCh. 30.4 - Prob. 1ST
Ch. 30.4 - Prob. 2STCh. 30.4 - Prob. 3STCh. 30.5 - Prob. 1STCh. 30.5 - Prob. 2STCh. 30.5 - Prob. 3STCh. 30 - Prob. 1QPCh. 30 - Prob. 2QPCh. 30 - Prob. 3QPCh. 30 - Prob. 4QPCh. 30 - Prob. 5QPCh. 30 - Prob. 6QPCh. 30 - Prob. 7QPCh. 30 - Prob. 8QPCh. 30 - Prob. 9QPCh. 30 - Prob. 10QPCh. 30 - Prob. 11QPCh. 30 - Prob. 12QPCh. 30 - Economists sometimes shock noneconomists by...Ch. 30 - Prob. 14QPCh. 30 - Prob. 15QPCh. 30 - Prob. 1WNGCh. 30 - Prob. 2WNGCh. 30 - Prob. 3WNG
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- Differentiate between adverse selection and moral hazard problems with one examplesarrow_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_forwardWhich of the following scenarios describes a risk? The roads are icy, but we decided to drive to work anyway. The winter storm left snow and ice all over the roadways. The current in the river is very swift today because of the storms last night. The floor was just mopped, so it might be slippery.arrow_forward
- An advertisement in the local paper offers a "fully loaded" car that is only six months old and has only been driven 5,000 miles at a price that is 20 percent lower than the average selling price of a brand new car with the same options. This low price is likely indicative of what type of situation? a) Adverse selection b)Moral hazard c) Winner's curse d) Perfect informationarrow_forwardThe difference between the value of one action and the value of the best alternative is called moral hazard. Group of answer choices True Falsearrow_forwardIf people get higher pay for insurance than their premium will this increase or decrease the death rate of average persons? Is this an example of a moral hazard or harvest selection. How will an insurance company deal with this problemarrow_forward
- You know that your cousin was responsible in breaking your neighbors window. Your neighbor is a struggling man and cannot afford to repair the window, so he is looking for the person responsible to repair it. You are confused whether to confess to your neighbor or keep pretending that you do not know. Which category of ethical dilemma does this situation come under? a. Societal b. International c. Professional d. Personalarrow_forward20-1 Your product fail about 2% of the time, on average. Some customers purchase the extended warranty you offer in which you will replace the product if it fails. Would you want to price warranty at 2% of the product price? Discuss both moral hazard and adverse selection issues.arrow_forwardThe lower the deductible on an insurance policy, the higher the premiums. True or Falsearrow_forward
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