Adverse selection arises when:
A. buyers and sellers with the same information about the quality of a good or the riskiness of a situation seek each other out.
B. buyers and sellers have different information about the quality of a good or the riskiness of a situation.
C. people behave in a riskier way because they have incomplete information.
D. the wants of both parties are aligned with one another.
Answer: B
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In the simple deposit expansion model, if the banking system has excess reserves of $75, and the required reserve ratio is 20%, the potential expansion of checkable deposits is
A) $75. B) $750. C) $37.50. D) $375.
The price of gold is $300 per ounce in New York and 2,550 pesos per ounce in Mexico City. If the law of one price holds for gold, the nominal exchange rate is ________ pesos per U.S. dollar.
A. 85.5 B. 8.5 C. 1.18 D. 0.118
Inflation rates over the last 40 years have generally:
A. decreased around the world. B. unchanged for developing nations and decreased for developed nations. C. increased around the world. D. decreased for developing nations and increased for developed nations.
All of the following are income in kind EXCEPT
A. government provided food stamps. B. government provided medical aid. C. income received from family members. D. services produced in the home.