One difference between moral hazard and adverse selection is
a. Adverse selection has to do with unobservable characteristics of individuals
b. Moral hazard has to do with unobservable actions of individuals
c. Adverse selection is individuals change their behaviors because of a contract
d. Only A&B
d
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To correct for the social impact of pollution, the government should levy a per-unit tax
A) that is the same for all polluters regardless of their locations or sizes. B) according to the economic damage of the pollution. C) according to the business activity of the polluter. D) only to those polluters that can afford to pay for the tax.
In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is:
A. Equal to the price B. Less than the price C. Greater than the price D. Equal to the average cost