Micro Economics Chapter 12 Flashcards
1
Q
Adverse selection
A
Adverse selection results when one party makes a decision based on limited or incorrect information, which leads to an undesirable results.
2
Q
Moral hazard
A
Moral hazard is a when an individual takes more risks because he knows that he is protected due to another individual bearing the cost of those risks.m
3
Q
Repugnant Market
A
Goods that are, in our society, inappropriate to put on the market. Like human organs.
4
Q
Merit Goods
A
These are goods that should be available for everybody, but are not. Think of healthcare, primary school, etc.
