What is adverse selection? Give an example and explain why it is a problem
What will be an ideal response?
Adverse selection can occur when a buyer or seller enters into an exchange with another party who has more information. In the case of health insurance people who know they are sick are more inclined to seek coverage and to withhold their condition from the insurance company. If insurance companies could identify these individuals they would charge them higher premiums.
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The optimal patent length is equal to 20 years
Indicate whether the statement is true or false
Microeconomic models focus on the behavior of
a. all households, businesses, and government sectors at the same time b. the household sector as a whole c. individual households and business firms d. individual households, business firms, and government agencies e. the business and government sectors