Correct Answer 1 Which of the following is an attempt to red

Correct Answer?

1. Which of the following is an attempt to reduce the problem of asymmetric information?

a. When someone is applying for a job, the employer checks references to determine the previous work habits of the applicant.

b. When someone is considering buying a used car from a dealership, the potential buyer requests documentation of the repair history of the car.

c. An insurance company requires people who want to purchase life insurance to take a physical exam.

d. All of the above are correct.

2. . Flora uses all of her income to purchase popcorn and butter. At any two points A and B on Flora’s budget constraint

a. Flora is equally happy.

b. Flora\'s income is different.

c. Flora is spending more money on popcorn than she is spending on butter.

d. the price of popcorn relative to the price of butter is the same.

3. Which of the following statements is correct?

a. The poverty line is adjusted for regional differences in the costs of raising children

b. One advantage to the Earned Income Tax Credit(EITC) is that it benefits the working poor.

c. Libertarians pursue policies to redistribute income from the rich to the poor.

d. Followers of the liberalism political philosophy believe that society should maximize the total of individual utilities.

4. Which of the following statements is not correct?

a. Critics of the welfare system argue that it breaks up families.

b. Libertarians are opposed to redistributing income.

c. Utilitarians believe that the government should punish crimes but should not redistribute income.

d. One of the problems with measuring income inequality is valuing in-kind transfers.

Solution

Ans 1)

All of the abpve options are correct as it helps principal to track the behavious of agent before signing the contraact and minimise assyletric information

Ans 2)

Ratio of prices of both the goods states the slope of budget line hence it has to be same all over it

Option D is correct response

Ans 3)

Earned Income Tax Credit is against the poverty as it will help to increase labor force participation which will help the poor.

Hence Option B is correct response

Ans 4)

Option A is incorrect because Main reason of breaking up families is povery more often than welfare