Countries with reliable phone service have difficulty not only communicating, but also reaping the benefits of other technology advances, such as the Internet.
a. True
b. False
QUESTION 2Insurance companies try to avoid adverse selection and moral hazard problems through all of the following methods except one. Which is the exception?
a. offering group policies
b. requiring lengthy application forms
c. requiring physical examinations
d. setting uniform premiums (i.e., prices of insurance policies) for all policies
e. requiring policyholders to pay a deductible
QUESTION 3The group of countries more likely to have a high number of telephone lines per 1,000 people is
a. high-income countries
b. zero-income countries
c. infinite-income countries
d. low-income countries
e. middle-income countries
QUESTION 4When applying for a loan, a borrower tends to know more about her ability to pay it back than does the bank. This is an example of
a. perfect information
b. moral hazard
c. a low marginal benefit of information for the bank
d. asymmetric information
e. optimal search
QUESTION 5Production and exchange depend on an reliable infrastructure of
a. transportation
b. communication
c. sanitation
d. electricity
e. All of the answers are correct
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