Which firm is not dealing with adverse selection
a. a manufacturer forgoes a usual 90 day probationary period for new employees
b. a temporary clerical agency requires a typing test
c. a manufacturer requires suppliers to be ISO 900 . certified
d. Smokers get the worse life insurance rates as non-smokers
QUESTION 2The market demand curve for any good is:
a. independent of individuals' demand curves for the good.
b. the vertical summation of individuals' demand curves.
c. the horizontal summation of individuals' demand curves.
d. derived from the firm's marginal cost of production.
QUESTION 3When someone contracts to do a task but fails to put full effort into the performance of an agreement, yet the lack of effort is not independently verifiable, this lack of effort constitutes a
a. breach of contractual obligations
b. denial of good guarantee
c. loss of reputation
d. moral hazard
QUESTION 4Which is a screen against adverse selection
a. Insurance companies require homeowners to have smoke detectors
b. Rearview cameras in cars
c. Installing engine monitors to track driving habits of the insured
d. Prospective secretaries must take a typing test before being hired
QUESTION 5If the wage rate rises, labor's share in the total costs of a production process:
a. will increase.
b. will decrease.
c. may increase or decrease depending on the elasticity of demand for the product.
d. may increase or decrease depending on the ease of substitution of other inputs for labor.
QUESTION 6Buying electricity off the freewheeling grid at one quarter 'til the hour for delivery on the hour illustrates:
a. relational contracts with distributors
b. vertical requirements contracts
c. spot market transactions
d. variable price agreements
QUESTION 7An indication that Insurance companies anticipate adverse selection is
a. they do not require a deductible
b. they do not classify clients into different risk types according to their claim history
c. they do not classify clients into different risk types according to pre-existing conditions
d. they require a co-payment
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