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Asymmetric information is a problem in many markets, such as the used car market, the insurance markets, and the credit markets. Choose one of these three markets, and using some of the concepts you learned from this module, discuss the questions below: What is the market response to asymmetric information? (Hint: Does Coca-Cola have an asymmetric information problem?). What is the market response to adverse selection? (Hint: When you purchased life insurance, did you have to take a physical exam?). What is the market response to moral hazard? (Hint: Remember last time you saw a doctor you had to pay a $30 deductible?). Do you think that education is a "market signal" that can help companies make better economic decisions when asymmetric information exists? What would be the market response if there was perfect information? need help with questions and brief explanation of asymmetric information
Suppose you can hire your mechanic for up to six hours. The total benefit and total cost functions are B(H)=420H-40H^2 and C(H)=100H+120H^2. The corresponding formulas for marginal benefit and marginal cost are MB(H)=420-80H and MC(H)=100+240H. Write..
Does a persistent balance of payment deficits result in a pressure to devaluate the currency.
A firm expects to install smog control equipment on the exhaust of a gasoline engine. The local smog control district has agreed to pay to the firm a lump sum of money to provide for the first cost of the equipment and maintenance during its 10-year ..
A brief look at Viet Nam's banking system, including its development, the role of the central bank, the currency, and the central bank’s influence on the level of prices. Interaction of the monetary system with the government’s fiscal policy, includi..
A firm is currently operating where the MC of the last unit produced is $64, and the MR of this unit is $70. Illustrate what would you advise this firm to do.
Suppose Congress and the president decide that the best method to stimulate the economy is to cut taxes. The total amount of tax cuts approved is $300 billion and the current MPC is .80. Determine the initial fiscal stimulus and the cumulative fiscal..
Explain how the adverse inflation shock affects the AS curve. (ii) Discuss, using AD-AS diagram, what choices the Fed now must make regarding monetary policy.
Suppose a union that represents some but not all of the employees in an industry is considering a strong push for increased pay for their members during the upcoming contract negotiations. However, they are concerned about the possibility that the co..
Suppose you are receiving a large shipment of Gizmos. The manufacturing standards provide that 1% of Gizmos turn out defective. You randomly select a sample of n = 25 from each lot and return the shipment if more than 2 are found defective. The proba..
Based on the date provided through the U.S. Department of the Treasury, is the public devt of the US government increasing or decreasing? What impact will this trend have on the budget of the federal government and on the U.S. economy as a whole?
A student has not yet graduated from school but is looking for a job. Is the student considered to be in the labor force? Why or why not? In what ways is GDP a misleading measure of economic performance? Is real GDP per person a sufficient measure of..
Discuss the positive aspects of globalization, and contrast these with the negative aspects of globalization from the perspective of a small business.
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