Which firm in an industry is likely to have higher profits?
a. Sellers with higher costs than their competitors
b. Sellers with lower costs than their competitors
c. Sellers with the same costs as their competitors
d. All of the above
QUESTION 2Adverse selection in insurance requires that
a. all people face the same risk
b. potential customers facing more risk are more interested in purchasing insurance
c. people are not risk averse
d. insurers can tell higher risk people from lower risk people
QUESTION 3Which of the following is more likely to be able to command a higher price for its products
a. A specialty frozen yogurt producer, with high quality product
b. A mall kiosk selling costume jewelry
c. A specialty toy store that allows customers to self-design teddy bears
d. Both A&C
QUESTION 4Adverse selection in insurance requires that
a. potential customers face different levels of risk
b. potential customers facing more risk are no more interested in purchasing insurance
c. people are not risk averse
d. insurers can tell higher risk people from lower risk people
QUESTION 5The RBV perspective is based on
a. Resource mobility
b. Resource immobility
c. Resource heterogeneity
d. Only A&C
QUESTION 6Adverse selection is
a. when people act differently because they are insured
b. when more risk averse people want to be insured more
c. when people at a greater risk want to be insured more
d. when your guess at a test question is wrong
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