Exam 12: Markets With Private Information

In a separating equilibrium, aggressive drivers pay a premium of ________ and safe drivers pay a premium of ________.

Suppose there are only two kind of cars in the market for used cars: lemons and good cars.A lemon is worth $1,000 both to its current owner and to anyone who buys it.A good car is worth $8,000 to its current and potential owners.Buyers can't tell whether a car is a lemon until after they have bought the car, and there is no warranty.What is the equilibrium price of a used car?

In the used car market, with a pooling equilibrium the price of a lemon is ________ the price of a good used car and with a separating equilibrium the price of a lemon is ________ the price of a good used car.

In the used car market, ________ is(are)a way of signaling.

In the used car market with warranties, the equilibrium is a ________ and there is ________.

In the market for automobile insurance, adverse selection implies that

The used car market without warranties suffers from

Screening

In the market for auto insurance, in a separating equilibrium,

Your grade point average acts as ________ to potential employers.

In the market for automobile insurance, moral hazard implies that

Bill purchases property insurance for his office building, which includes coverage for fire damage.The policy offers premium discounts for smoke detectors, fire alarms, fire extinguishers and sprinkler systems.This is an incentive system to help avoid

In the market for auto insurance, with a pooling equilibrium ________ and with a separating equilibrium ________.

In the health insurance market, moral hazard occurs when

The missing insurance market in health care is the insurance market for

Adverse selection can occur when

In an insurance market, moral hazard exists chiefly because of

-The figures show the expenditures per person on health care and the efficiency of the health care system in 8 different nations.The United States is bar ________ in expenditures per person and is bar ________ in efficiency index.

Dan, age 19, may have trouble buying auto insurance at a low price because insurance companies

In a separating equilibrium, there is ________ of insurance in the market for safe drivers and there is ________ of insurance in the market for aggressive drivers.