Whenever there is adverse selection, there will be missing market.

Answer the following statement true (T) or false (F)


False

Rationale: If no attempt is made to uncover information, markets will be missing in the sense that either a pooling equilibrium emerges (with markets targeted at individual types missing) or, in a separating equilibrium, a restricted output choice is offered to low cost types in order to keep high cost types from buying in the low cost market. But if there are successful signals and/or screens, no markets might be missing.

Economics

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