Question
1. A colleague tells you that he can get a business loan from the bank, but the rates seem very high For what your colleague
1. A colleague tells you that he can get a business loan from the bank, but the rates seem very high
For what your colleague considers a low risk loan.
- WHAT IS an adverse selection explanation for this, the offer advice to your friend on how to solve the problem?
- What is a moral hazard explanation for this, and offer advice to your friend on how to solve the problem?
2. Due TO Pandemic the demand for face masks has tripled. Should XYZ MEDICAL MANUFACTURING INC., INCREASE THE PRODUCTION OF THEIR FACE MASKS? SHOULD IT INVEST IN DOUBLING PRODUCTION CAPACITY?
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Economics
Authors: R. Glenn Hubbard
6th edition
978-0134797731, 134797736, 978-0134106243
