9 The marginal cost of educating a college student is $5,000 a year. Students Marginal bene (millions per year) (dollars per student p The table shows the marginal benefit schedule of a 1 5000 college education. The marginal external benefit of a 2 3 000 college education is a constant $2,000 per student per 3 2'000 year. There are no public colleges. ' 4 1,500 With no government involvement in college education, 5 1,200 how many students enroll, what is the tuition, and what 6 1,000 is the deadweight loss created? 7 800 8 500 {E) With no government involvement in college education, D million students enroll and tuition is $|:| per 0 student per year. The deadweight loss created is $|:| million. I9 Table 1 shows the demand schedule for Table 1 electricity from a coal burning utility. Price Quantity demanded . _ (cents per kilowatt) (kilowatts per day) Table 2 shows the utility's cost of producing electricity and the external cost 4 500 of the pollution created. 8 400 12 300 With no pollution control, calculate the 16 200 quantity of electricity produced, the price 20 100 of electricity, and the marginal external 24 0 cost of the pollution generated. Table 2 Quantity Marginal Marginal (kilowatts per cost external cost day) (cents per kilowatt) E) o 0 o 100 2 2 With no pollution control, the quantity of 200 4 4 electricity produced is D kilowatts a day. 300 6 6 400 8 8 The price of electricity is D cents a 500 10 10 kilowatt. The marginal external cost of the pollution generated is D cents a kilowatt. Zaneb is a high-school teacher and is well known in her community for her honesty, integrity, and sense of social responsibility. She is shopping for a used car. She plans to buy the used car from a local dealer and auto insurance from a major insurance company. What asymmetric information problems is Zaneb likely to encounter and what arrangements are likely to help cope with those problems? (I) When Zaneb buys the used car, the problem of . The arrangement that helps cope with this problem is moral hazard occurs because the car dealer knows more about the car than Zaneb knows; a warranty 'jj- B. adverse selection occurs because the car dealer knows if the car was involved in an accident; collision insurance 'j; C. adverse selection occurs because Zaneb knows how much money she can afford to spend on the car; a good credit rating jj- D. adverse selection occurs because the car dealer knows more about the car than Zaneb knows; a warranty j} E. moral hazard occurs because the car dealer knows if the price of the car is comparable to similar cars at other dealerships; comparison shopping When Zaneb buys insurance, the problem of . The arrangement that helps cope with this problem is {1:} A. moral hazard occurs because Zaneb could drive carelessly after she is insured; taking a large deductible moral hazard occurs because Zaneb could drive carelessly after she is insured; taking a small deductible adverse selection occurs because Zaneb could decide to use her car to transport students to extracurricular events; an agreement between Zaneb and the auto-insurance company stating the car cannot be used for school purposes When Zaneb buys insurance, the problem of . The arrangement that helps cope with this problem is A. moral hazard occurs because Zaneb could drive carelessly after she is insured; taking a large deductible B. moral hazard occurs because Zaneb could drive carelessly after she is insured; taking a small deductible C. adverse selection occurs because Zaneb could decide to use her car to transport students to extracurricular events; an agreement between Zaneb and the auto-insurance company stating the car cannot be used for school purposes ("22- D. adverse selection occurs because Zaneb could decide to loan the car to one of her students; making the premium payment an annual payment instead of quarterly '11:} E. moral hazard because Zaneb may sell the car; making the premium payment an annual payment instead of quarterly