Refer to Figure 7-1. Under autarky, the consumer surplus is area

We can say that a contract is able to prevent moral hazard when

A) it eliminates production inefficiencies due to moral hazard without shifting risk to risk-averse people. B) it eliminates production inefficiencies due to moral hazard without shifting risk to risk-loving people. C) it shifts risk to risk-loving people. D) it eliminates production inefficiencies due to moral hazard and shifts risk to risk-averse people.

Rational ignorance is

A) a result of our educational system. B) the curtain, or wall, of knowledge between the persons that are educated and those that are not. C) the curtain behind which people choose to hide to avoid knowledge about poverty and, in general, the unequal distribution of income. D) the curtain separating educated voters from uneducated voters. E) none of the above