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Identify Whether Each of the Following Transactions Will Take Place

question 154

Essay

Identify whether each of the following transactions will take place in the factor market or in the product market.
a.Graciela buys a Tesla Motors Model X.
b.Lashan works 60 hours a week at a law firm.
c.Tito sells his family's farmland to a housing developer.
d.Tesla Motors increases employment at its Fremont, California plant.


Definitions:

Moral Hazard

The risk that one party to a transaction might change their behavior to the detriment of the other party after the transaction has taken place, particularly when the first party is protected from the consequences.

Adverse Selection

A situation where asymmetric information results in high-risk individuals buying insurance or goods more frequently than low-risk individuals, distorting the market.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good producers are willing to supply.

Medical Care

The maintenance or improvement of health via the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in people.

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