Which of the following is false?
a. Product liability laws can make it unprofitable to sell shoddy merchandise, providing a substantial incentive to provide safe products independent of government regulations.
b. Asymmetric information exists when the available information is initially distributed in favor of one party to a transaction relative to another.
c. In adverse selection situations, it is rational for a seller with more information about a product to provide a truthful and complete disclosure and make that fact known to a potential buyer.
d. Moral hazard arises in part from the fact that it is costly for an insurer to monitor the behaviors of the insured party.
c
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A spot contract is a(n):
a. promise to purchase a foreign currency in 30 days. b. promise to purchase a foreign currency in 90 days. c. contract for the immediate exchange of currencies. d. agreement to sell currencies at a fixed price indefinitely.
Jane's Garage Cleaning is a perfectly competitive firm that currently cleans 40 garages a week. Jane's marginal cost is less than the price she charges. Jane can increase her profit if she
A) charges a higher price. B) charges a lower price. C) cleans fewer than 40 garages a week. D) cleans more than 40 garages a week.