The budget line shift from ab to cd in the above figure is consistent with:
A) decreases in the prices of both M and N .
B) an increase in the price of M and a decrease in the price of N .
C) a decrease in money income.
D) an increase in money income.
Answer: B) an increase in the price of M and a decrease in the price of N .
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Which of the following is a prominent solution to adverse selection in used-car markets?
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What will be an ideal response?