Author Question: Which of the following is false? a. Product liability laws can make it unprofitable to sell shoddy ... (Read 69 times)

jjjetplane · **on:** Jun 30, 2018

Which of the following is false?
a. Product liability laws can make it unprofitable to sell shoddy merchandise, providing a substantial incentive to provide safe products independent of government regulations.
b. Asymmetric information exists when the available information is initially distributed in favor of one party to a transaction relative to another.
c. In adverse selection situations, it is rational for a seller with more information about a product to provide a truthful and complete disclosure and make that fact known to a potential buyer.
d. Moral hazard arises in part from the fact that it is costly for an insurer to monitor the behaviors of the insured party.

Question 2

The principle of comparative advantage states that a country should specialize in the production of those goods that have the highest opportunity costs.
a. True
b. False
Indicate whether the statement is true or false