Exam 12: Markets with Private Information

When Sam makes an agreement and then behaves after the agreement in a way to increase his benefits and harm then other party to the agreement,Sam is illustrating

Used car buyers believe a car is good quality when the seller signals the car's quality by offering a warranty because

Your grade point average acts as ________ to potential employers.

What is the missing insurance market in health care? Why don't private markets provide this insurance?

JCPenney guarantees to refund a customer's money if the customer returns poorly made clothing.This guarantee is an example of

In the insurance market,moral hazard and adverse selection are the result of

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

Which of the following has a positive externality and hence can be underprovided?

Because Don has health insurance,he is more likely to see the doctor when he has a cold.This is an example of

Adverse selection can occur when

If a health insurance company offers coverage regardless of age,health status,or smoking history,it is likely to suffer

In the market for automobile insurance,adverse selection implies that

In the health insurance market,moral hazard occurs when

In the market for automobile insurance,drivers can reveal that they are low risk by buying policies with ________ deductibles and ________ premiums. A) high; low B) low; high C) high; high D) low; low E) zero; high

The figures show two auto insurance markets, one market for safe drivers and one market for aggressive drivers. -In a separating equilibrium,aggressive drivers pay a premium of ________ and safe drivers pay a premium of ________.

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

Signals are believable when the cost of sending a ________ is known to be ________.

In the market for automobile insurance,moral hazard implies that

In the used car market with warranties,the market for lemons (poor quality used cars)is ________ and the market for good cars is ________.

The figures show two auto insurance markets, one market for safe drivers and one market for aggressive drivers. -In a pooling equilibrium,aggressive drivers pay a premium of ________ and safe drivers pay a premium of ________.