The practice of charging different prices on the basis of varying customer preferences is known as:

George's parents let him use the family car whenever he wants, but require that he pays for all gas he uses. George has been driving the car 100 miles per week

His parents want to limit how much he drives the family car, but don't want to impose a major burden on his finances. Mom's plan is to charge him a dollar for each ten miles he drives the car (per week), but to increase his allowance by $10. Dad thinks this plan will have no effect on his driving since he is going to get the money back at the end of the week. Who is right? Explain.

The Department of Education noticed that for loans granted to students without any strings, the average grade point average of the students decreases dramatically over time, while the students whose loans renew only if they pass their courses tends to stay stable. This could be due to a

a. Adverse selection problem b. Moral hazard problem c. Typical college life phenomenon d. None of the above