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Author Question: When does the problem of adverse selection arise in any market?[br][br][b][color=#566D7E]Question ... (Read 74 times)

wenmo

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on: Jun 30, 2018
When does the problem of adverse selection arise in any market?

Question 2

The CEO and stockholders are not necessarily the same people. This gives rise to
 A) upstream and downstream contracts.
  B) a principal-agent problem.
  C) complete contracts.
  D) a control over moral hazard.


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allisonblackmore

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Reply #1 on: Jun 30, 2018
Answer to Question 1

The problem of adverse selection becomes prominent when a seller is unable to obtain reliable information from a number of buyers. In insurance, adverse selection can happen if high-risk persons insure themselves more heavily than low-risk persons.

Answer to Question 2

B


wenmo

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Reply 2 on: Jun 30, 2018
Wow, this really help

Mochi

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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