What options are available in each instance to reduce the problem?

Explain the nature and consequences of asymmetric information for each of the following c Show more Question 1 Explain the nature and consequences of asymmetric information for each of the following cases. What options are available in each instance to reduce the problem? a. medical insurance b. issuance of credit cards c. professional athletes d. market for used appliances Question 2 Consider the information below: For Group A the cost of attaining an educational level y is CA(y) = $6000y and for Group B the cost of attaining that level is CB (y) = $10000y. Employees will be offered $50000 if they have y < y* where y* is an education threshold determined by the employer. They will be offered $130000 if they have y > y*. The highest level of y* that can be set and still have the high-productivity people choose to meet it is A) 16. B) 13 1/3. C) 13. D) 8. E) 0. The lowest level of y* that can be set and still have only the high-productivity people meet it is A) 16. B) 13 1/3. C) 13. D) 8. E) 0. If the threshold educational level y* is set at 10 A) only individuals in Group A will attain it. B) only individuals in Group B will attain it. C) individuals in both groups will attain it. D) no individuals will attain it. E) some fraction of individuals in each group will attain it. If the threshold educational level y* is set at 7 A) only individuals in Group A will attain it. B) only individuals in Group B will attain it. C) individuals in both groups will attain it. D) no individuals will attain it. E) some fraction of individuals in each group will attain it. If the threshold educational level y* is set at 14 A) only individuals in Group A will attain it. B) only individuals in Group B will attain it. C) individuals in both groups will attain it. D) no individuals will attain it. E) some fraction of individuals in each group will attain it. Show less

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