1. Briefly explain how unemployment insurance is affected by both moral hazard and adverse selection. 2. Consider the following gamble. If you roll a 1 on a fair (six sided) die you must pay $12. If you roll a 2, 3, 4, 5, or 6 you will be paid $6. What is your expected value from this game? 3. Suppose that Amy is more likely to pick up broken glass if she has health insurance than if she does not have health insurance. Is this example consistent with adverse selection? Is this example consistent with moral hazard? 4. In words, what is the Marginal rate of technical substitution? 5. In words, what is an isocost line? 6. In words, what is an isoquant? 7. Complete the statement. "If the marginal is above the average, then 8. Explain the long run condition for producing at least cost. "Medium Questions" 9. How is the firm's optimal choice problem similar to the consumer's optimal choice problem? 10. On one graph, draw the average total cost, average variable cost, and marginal cost curves assuming "U-shaped" costs. 11. List four conditions for perfect competition