Adverse selection refers to a situation in which
a. employers have more information about a job's salary than the job candidate does
b. a job candidate has more information about the job's salary than the employer does
c. employers have more information about a job candidate's abilities than the candidate does
d. a job candidate has more information about her abilities than the employer does
e. only below-average job candidates apply for a job
D
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Figure 5-5
Figure 5-5 shows a consumer budget line for French fries and hamburgers. The household allocates a budget for these two goods.. If the price of an order of french fries is $2, how much income is allocated to fries and burgers combined?
a.
$2
b.
$4
c.
$20
d.
$40
Big Waves is a large water park. Suppose the individual demand for entrance into Big Waves is Qd = 50 - (2 × P) and each consumer has the same demand. Big Waves has a constant marginal cost of $5 per consumer. If Big Waves practices two-part pricing and requires a membership fee and then a separate entrance fee, what is the profit-maximizing entrance fee?
A) $200 B) $10 C) $5 D) $50