How do online auction sites like Ebay attempt to overcome the asymmetric information problems associated with goods that the buyer cannot personally inspect before purchase?
A) The online auction firm only allows high-quality merchandise to be sold at their site.
B) The previous performance (reputations) of the buyer and seller are posted for public review.
C) Buyers can take receipt of any goods before they have to pay the seller.
D) all of the above
Question 2
The present value formula makes it apparent that:
A) a decline in the interest rate will cause a decision maker to weigh recent period returns relatively more heavily than before the decline.
B) an increase in the interest rate will cause a decision maker to weigh distant (or future) returns relatively more heavily than before the increase.
C) the present value of a fixed sum decreases as the time until it is to be paid increases.
D) all of the above
E) both A and C.
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