Session:16 Information, Risk, and Insurance
Critical Thinking Questions
Principles of Microeconomics 3e | Leadership Development – Micro-Learning Session
Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-microeconomics-3e
19. You are on the board of directors of a private high school, which is hiring new tenth-grade science
teachers. As you think about hiring someone for a job, what are some mechanisms you might use to
overcome the problem of imperfect information?
20. A website offers a place for people to buy and sell emeralds, but information about emeralds can be quite
imperfect. The website then enacts a rule that all sellers in the market must pay for two independent
examinations of their emerald, which are available to the customer for inspection.
a. How would you expect this improved information to affect demand for emeralds on this website?
b. How would you expect this improved information to affect the quantity of high-quality emeralds sold
on the website?
21. How do you think the problem of moral hazard might have affected the safety of sports such as football
and boxing when safety regulations started requiring that players wear more padding?
22. To what sorts of customers would an insurance company offer a policy with a high copay? What about a
high premium with a lower copay?
teachers. As you think about hiring someone for a job, what are some mechanisms you might use to
overcome the problem of imperfect information?
20. A website offers a place for people to buy and sell emeralds, but information about emeralds can be quite
imperfect. The website then enacts a rule that all sellers in the market must pay for two independent
examinations of their emerald, which are available to the customer for inspection.
a. How would you expect this improved information to affect demand for emeralds on this website?
b. How would you expect this improved information to affect the quantity of high-quality emeralds sold
on the website?
21. How do you think the problem of moral hazard might have affected the safety of sports such as football
and boxing when safety regulations started requiring that players wear more padding?
22. To what sorts of customers would an insurance company offer a policy with a high copay? What about a
high premium with a lower copay?