Which of the following is an example of an adverse selection problem?
a. A customer purchases four apples, two of which are bruised.
b. A card shop puts its Halloween merchandise on sale on November 1st.
c. A young job applicant fails to reveal that she was fired from her last job because she was incompetent.
d. A man rents a car and then drives it less carefully and fills it with cheaper gas than he would if he owned it.
c
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Last month, the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit. This month, the company supplied the same quantity of binders at $4 per unit. Based on this evidence, Tecumseh has experienced
A) an increase in supply. B) a decrease in the quantity supplied. C) an increase in the quantity supplied. D) a decrease in supply.
One type of financial intermediary now rising in relative importance is
A) pension funds. B) banks. C) savings-and-loan associations (S&Ls). D) life insurance companies.
For firms that sell one product in a perfectly competitive market, average revenue will:
A. increase if marginal revenue is greater than it. B. decrease if marginal revenue is greater than it. C. always be the same as marginal revenue. D. always be greater than average total cost.
Under a progressive income tax, the average tax rate
A. decreases as income increases. B. remains constant at all levels of income. C. increases as income increases. D. initially decreases, then increases, as income increases.