Adverse selection refers to the actions people take after they have entered into a transaction that make the other party to the transaction worse off

Hannah's Harmonicas sells 1,000 harmonicas each month at a price of $10.00 each. (She could sell as many as she wishes at that price.) If the marginal cost of producing an additional harmonica is $9.60, then

a. Hannah should produce additional harmonicas b. Hannah could possibly reduce her profits by producing one additional harmonica c. Hannah must currently be maximizing her profits d. too many harmonicas are being produced, from society's point of view e. Hannah's total economic profit is $400 per month

According to behavioral economics, cognitive biases:

A. create errors in decision making, but these errors are random and follow no particular pattern. B. occur but are not prevalent enough to distort the behavioral predictions of neoclassical economics. C. are misunderstandings or misperceptions that cause systematic error. D. are solely the result of faulty heuristics.