Which of the Following Can Create Inefficiency and Deadweight Loss

question 69

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 are 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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Definitions:

Cluster C

A category within the Diagnostic and Statistical Manual of Mental Disorders, referring to personality disorders characterized by anxious and fearful behavior.

DSM-5

The fifth edition of the Diagnostic and Statistical Manual of Mental Disorders, a publication by the American Psychiatric Association that classifies and provides criteria for mental disorders.

Big Five Personality

A theory that describes personality through five broad dimensions: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Diagnostic

Pertains to the process of identifying or determining the nature and cause of a disease or condition through examination of symptoms and tests.