QUESTION 7 Consider the following statements: (1) While life expectancy in the US is positively correlated with household income, this relationship has become weaker in the last decade. (2) The concept of adverse selection illustrates that asymmetric information can lead to market failure, in particular in the market for health insurance. a. Both statements are correct. O b. Both statements are incorrect. O c. Statement (1) is correct but (2) is not. O d. Statement (2) is correct but (1) is not. QUESTION 8 Kidney transplantation is an example where people can benefit from exchanging goods but cannot rely on monetary prices to allocate goods. Market design can greatly improve welfare in such cases. O a. Correct O b. Incorrect QUESTION 9 Loss aversion describes the tendency of humans... O a. to try to avoid losses at all costs. O b. to be competitive. O c. to find it more important to avoid a loss than to realize an equally sized gain