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Author Question: Adverse selection is created by A) incentives to change behavior after two parties have reached ... (Read 37 times)

tiara099

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on: Jun 29, 2018
Adverse selection is created by
 
  A) incentives to change behavior after two parties have reached an agreement.
  B) risk.
  C) lump-sum taxes.
  D) private information.

Question 2

What is the best outcome for society: when firms in an oligopoly enter into a collusive agreement to operate as a monopoly or when they act as perfect competitors? Briefly explain your answer.
 
  What will be an ideal response?


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efwsefaw

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Reply #1 on: Jun 29, 2018
Answer to Question 1

D

Answer to Question 2

The best outcome for society is when the firms act as perfect competitors. Perfect competition produces the efficient quantity of output. A monopoly restricts the quantity of output it produces and creates a deadweight loss, which harms society So society is better off if the firms compete rather than collude and operate as a monopoly.


tiara099

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Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it

Sarahjh

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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