Adverse selection in insurance requires that
a. potential customers face different levels risk
b. potential customers facing more risk are no more interested in purchasing insurance
c. people are not risk averse
d. insurers can tell higher risk people from lower risk people
Question 2
The deadweight loss from a monopoly refers to:
a. the portion of a monopolist's profits that are above the competitive profit level.
b. the increase in price due to the monopolization of a market.
c. the inefficient use of factors of production by a monopoly.
d. the loss of consumer surplus due to the monopolization of a market that is not transferred to another economic actor.
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