12.6
What was the example used for Asymmetric Information?
Inside Investing
Would someone with little/no Income with a good credit score get a high value loan?
No
What is an example of a Merit Good we have in Canada
Healthcare, Education and Legal Representation.
(any one of them is right)
How Could Driving your car cause Market Failure
Overuse of cars and an overpopulation of cars
What is Asymmetric Information?
Asymmetric Information is when some people are given access to information other's aren't
how do banks make sure you pay the loan
Making you offer up something as collateral - Could include things like a car, house, valuable possession etc.
Why isn't adoption considered Repugnant, and why would it belong in a normal Market?
A law in Canada, as well as most other countries, allows parents to put up children for adoption, reliant on the fact that they aren't sold for a monetary value. Doing so would be very Unethical.
What is a possible remedy to taking an international flight that the government can use
taxes and quotas to limit flight
What is a hidden Attribute, with respect to MicroEconomics?
A hidden Attribute is when someone has access to exchange relevant information someone else doesn't. The example used in the slide was the buyer of a used car not knowing the exact condition of a car
Who has to counteract a failing bank
the owner
What is a Repugnant Market?
A Market that Violates Basic Human Dignity, and violates social and ethical norms
What kinds of costs and benefits are associated with the overuse of pesticide?
Private Benefit: The overproduction of crop resulting in improved profits for a business
External Cost: environmental damages, negative externalities, increased wild life harm
What is the issue with Hidden Attributes? Or the main problem that is associated with them?
The Main issue that arises with the hidden attribute problem is buyers typically have little to no information about the quality or performance of what they are buying, the example used being buying a used car.
What would happen if the bank offered out too many loans?
There would be a chance of the bank going bankrupt. This can be seen in the 2008 financial crisis when Banks offered "subprime loans" meaning loans to people who had little to no way to pay it off, then they defaulted on the loan, and in mass, caused the banks to go under
Why are Merit Goods free to all citizens who reside within a certain country?
Merit Goods are Free to all citizens within a certain country because based on the values of any given country, are considered to be the basic right of every citizen.
Why do Market Failures happen?
People don't fully take account of their actions on others
A Missing Market is a market that is inefficient, for larger industries such as banks, are bailed out to ensure semi-optimal performance. What was the example used in the slides to describe Missing Markets?
The Example used was the Health Insurance Problem.
The Health Insurance Market was inefficient because the firm raised Insurance prices which cut out people who bought insurance as a precaution, opposed to a neccessity, out of the market.
Why do banks ask for collateral?
They ask for collateral so if the client fails to repay the bank for the loan, they have something of value to take from the client to even out the costs that the loan incurred
What is Ronald Coase's view on Markets and Firms?
Ronald viewed Markets and Firms are bound by the constraint of what to make, and whether or not to buy or sell, he also viewed Domestic production, can often be much more affordable rather than purchasing from elsewhere.
What kinds of problems can stop the government from imposing taxes and prohibitions?
Information problems: Hidden Attributes, Actions and Asymmetric Information