ECON B251 Chapter 10
Canvas actual
questions with
complete verified
solutions 2025
Moral hazard is present when
A. There are different types of individuals and it is difficult to tell
the different types apart
B. The marginal cost of the last unit is smaller than the marginal
benefit
C. A particular action changes incentives for behavior for some
people
D. There are large external costs - answer C. A particular action
changes incentives for behavior for some people
Adverse selection is present when
A. There are different types of individuals and it is difficult to tell
the different types apart
B. The marginal cost of the last unit is higher than the marginal
benefit
C. A particular contract changes incentives for behavior for some
people
, D. There are large external benefits - answer A. There are different
types of individuals and it is difficult to tell the different types apart
Drivers who buy insurance for their cars and for liability are most
likely
A. More likely to be involved in accidents
B. Driving more recklessly
C. Run stop signs more frequently
D. All of the above - answer D. All of the above
The government announces that it will bail out all big banks in the
next recession. As a consequence, we can expect
A. More mergers in the banking sector
B. More risky lending
C. Higher taxes
D. All of the above - answer D. All of the above
The individual mandate in the Affordable Care Act is intended to
A. Provide incentives to overcome a negative externality and buy
health insurance
B. Overcome a moral hazard problem
C. Solve the problem of unravelling of the health insurance market
due to the lemons problem
D. All of the above. - answer C. Solve the problem of unravelling of
the health insurance market due to the lemons problem
When getting the oil in your car changed
Canvas actual
questions with
complete verified
solutions 2025
Moral hazard is present when
A. There are different types of individuals and it is difficult to tell
the different types apart
B. The marginal cost of the last unit is smaller than the marginal
benefit
C. A particular action changes incentives for behavior for some
people
D. There are large external costs - answer C. A particular action
changes incentives for behavior for some people
Adverse selection is present when
A. There are different types of individuals and it is difficult to tell
the different types apart
B. The marginal cost of the last unit is higher than the marginal
benefit
C. A particular contract changes incentives for behavior for some
people
, D. There are large external benefits - answer A. There are different
types of individuals and it is difficult to tell the different types apart
Drivers who buy insurance for their cars and for liability are most
likely
A. More likely to be involved in accidents
B. Driving more recklessly
C. Run stop signs more frequently
D. All of the above - answer D. All of the above
The government announces that it will bail out all big banks in the
next recession. As a consequence, we can expect
A. More mergers in the banking sector
B. More risky lending
C. Higher taxes
D. All of the above - answer D. All of the above
The individual mandate in the Affordable Care Act is intended to
A. Provide incentives to overcome a negative externality and buy
health insurance
B. Overcome a moral hazard problem
C. Solve the problem of unravelling of the health insurance market
due to the lemons problem
D. All of the above. - answer C. Solve the problem of unravelling of
the health insurance market due to the lemons problem
When getting the oil in your car changed
