Which of the Following Is the Best Example of a "What

question 131

Multiple Choice

Which of the following is the best example of a "What?" question?

• A) Should automobiles be produced using workers or robots?
• B) Should higher-income or lower-income people buy SUVs?
• C) Should we make faster microprocessors or pest-resistant corn?
• D) Should migrant workers or domestic workers be used to pick grapes?
• E) What should doctors be paid?

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Definitions:

Asymmetric Information

A situation in which one party in a transaction has more or superior information compared to another, often leading to an imbalance in power or unfair advantages.

Adverse Selection

A situation in which one party in a transaction has more or better information than the other, often leading to a misallocation of resources.

Moral Hazard

A situation in economic theory where one party is willing to take more risks because the negative consequences of the risk will be borne by another party.

Moral Hazard

A situation where one party is more likely to take risks because another party bears the consequences of those risks.