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Home » Practice Questions

Asymmetric Information: How Hidden Facts Shape Markets

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Asymmetric Information

2 Topics
|
4 Quizzes
1. Asymmetric Information and Used Cars
  1. Practice Questions
  2. Learn with AI
2. Asymmetric Information in Health Insurance
  1. Practice Questions
  2. Learn with AI
Moral Hazard

2 Topics
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4 Quizzes
1. Moral Hazard
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  2. Learn with AI
2. Solutions to Moral Hazard
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  2. Learn with AI
Signaling

1 Topic
|
2 Quizzes
1. Signaling
  1. Practice Questions
  2. Learn with AI

Participants 65

Adam
Aaron
Abdulaziz
Abir
Abraham

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Practice Questions

Asymmetric Information: How Hidden Facts Shape Markets
Moral Hazard
Solutions to Moral Hazard
Practice Questions

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Question 1 of 3

1. Question

How do services like home inspections and second medical opinions address the principal-agent problem?

a. By letting agents set their own prices
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b. By encouraging more aggressive selling tactics
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c. By limiting the agent’s ability to benefit from hidden information
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d. By eliminating the need for professional licensing
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Question 2 of 3

2. Question

Which of the following best describes how solutions to moral hazard typically work?

a. By increasing information available to buyers and sellers
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b. By reducing the perverse incentives faced by buyers or sellers
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c. By legally requiring buyers and sellers to behave honestly
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d. Both A and B
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Question 3 of 3

3. Question

Which of the following most accurately describes the tradeoff in designing moral hazard solutions?

a. The more information you collect, the more moral hazard you create
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b. Increasing transparency always reduces risk but increases cost
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c. Aligning incentives reduces moral hazard but can introduce adverse selection
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d. Reducing incentives for opportunism may also reduce beneficial risk-taking
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