The Answer to the Problems of Adverse Selection and Moral

question 23

Multiple Choice

The answer to the problems of adverse selection and moral hazard are found partly in the fact that

• A)elections work through competition, which motivates rational candidates to formulate policies that will please voters.
• B)elections do not require candidates to reveal much information about themselves.
• C)history matters, so candidates who have won elections before will win again.
• D)when many peoples' preferences are assembled together, these small problems usually vanish due to the large numbers of voters.

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Definitions:

Higher Income

Refers to earnings that are above the median income level for a given region or population, often associated with greater economic stability and purchasing power.

Poverty Line

is a threshold set by a government or organization, below which individuals or families are considered to live in poverty, based on income.

Poverty Rate

A measure of the proportion of a population living below the poverty line, indicating the extent of economic hardship.

Working Poor

Individuals who have employment but whose income levels fall below a poverty line, typically due to low-paying jobs.