Which of the Following Can Create Inefficiency and Deadweight Loss

question 99

Multiple Choice

Which of the following can create inefficiency and deadweight loss?

• A) Moral hazard can create inefficiency and deadweight loss but adverse selection cannot.
• B) Adverse selection can create inefficiency and deadweight loss but moral hazard cannot.
• C) Both moral hazard and adverse selection can create inefficiency and deadweight loss.
• D) Neither moral hazard nor adverse selection can create inefficiency and deadweight loss.
• E) None of the above answers is correct because whether inefficiency and deadweight loss are created depends on whether the moral hazard and adverse selection affect demanders or suppliers.

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To record or enroll officially, such as a name or information, in a list, directory, or database.

S Corporation

A special designation of corporation that allows for pass-through taxation, where the corporation's income is taxed at the shareholder level, rather than at the corporate level.

Shareholders

Individuals or entities that own shares in a corporation, giving them a claim on part of the corporation's assets and earnings.

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Individuals who possess citizenship of the United States, either by birth or naturalization.