QUESTION 32 Moral hazard is caused by O a. Hidden actions b. Hidden information O c. Both of the above O d. None of the above QUESTION 33 Adverse selection is caused by O a. Hidden actions O b. Hidden information O c. Both of the above O d. None of the above QUESTION 34 Screening is O a. actions by the more informed party to conceal her true risks O b. actions by the less informed party to uncover the true risks O c. actions by the less informed party to conceal the true risks O d. actions by the more informed party to reveal her true risks QUESTION 35 Signaling is a. actions by the more informed party to reveal her true risks O b. actions by the less informed party to uncover the true risks O c. actions by the more informed party to conceal her true risks O d. actions by the less informed party to conceal the true risks QUESTION 36 Which of the following is NOT a signal? O education O a male peacock's feathers O a pre-FDIC bank built of granite with an ornate marble lobby O a crop futures contract QUESTION 37 The lemon problem is O a. cars of verifiable low quality are withheld from the used car market O b. cars of verifiable high quality are withheld from the used car market O c. cars of unverifiable high quality are withheld from the used car market O d. cars of unverifiable low quality are withheld from the used car market QUESTION 38 The lemon problem is an example of O a. adverse selection O b. screening O c. signaling O d. moral hazard 4 QUESTION 39 The following is an example of adverse selection O a. Individuals living in less secure neighborhoods want to buy less insurance O b. A majority of those applying for well paid jobs are well qualified O c. More reckless drivers opt for cars with fewer safety devices O d. Individuals with a strong family history of heart diseases opt to buy more insurance QUESTION 40 An indication that Insurance companies anticipate adverse selection is O a. they classify clients into different risk types according to pre-existing conditions O b. they do not classify clients into different risk types according to their claim history O c. they do not require a co-payment d. they do not require a deductible