Which of the following statements is correct?
a. A high-risk person is more likely to apply for insurance than a low-risk person because a high-risk person would benefit more from insurance protection.
b. A low-risk person is more likely to apply for insurance than a high-risk person because a low-risk person would benefit more from insurance protection.
c. Insurance companies can fully guard against the problem of adverse selection, but they cannot fully guard against the problem of moral hazard.
d. Insurance companies can fully guard against the problem of moral hazard, but they cannot fully guard against the problem of adverse selection.
a
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Rebecca can stitch 6 shirts in a day while Eliza can stitch only 5 shirts in a day. Rebecca can stitch 2 trousers in a day while Eliza can stitch 3 trousers in a day. Which of the following is true in this case?
A) Rebecca has a comparative advantage in stitching trousers. B) Eliza has an absolute advantage in stitching trousers. C) Rebecca has an absolute advantage in stitching trousers. D) Eliza has a comparative advantage in stitching shirts.
The law that prohibits price from reaching its equilibrium point, by enforcing a maximum that is below equilibrium is called a _____ and results in a _____
a. price ceiling; shortage b. price ceiling; surplus c. price floor; shortage d. price floor; surplus