One of the solutions to the adverse selection problem in insurance is
a. Is to require that only the high risk individuals to buy insurance
b. Is to require that only the low risk individuals buy insurance
c. Is to require everyone to buy insurance
d. Is to completely ban insurance companies
c
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In the above table, when 200 brownies are produced
A) marginal social benefit is greater than marginal social cost, and resource use is efficient. B) marginal social benefit is greater than marginal social cost, and there is a deadweight loss. C) marginal social benefit equals marginal social cost, and resource use is efficient. D) marginal social benefit is less than marginal social cost, and there is a deadweight loss.
When an industry is characterized by technology spillover, what should the government do to ensure that the market equilibrium equals the socially optimal equilibrium?
a. Impose a tax greater than the value of the technology spillover. b. Not allow production of any product that causes a technology spillover. c. Provide a subsidy equal to the value of the technology spillover. d. Require producers to "clean up" any spillover that results from their production process.