Adverse selection:
A. is about actions and occurs after the parties have voluntarily entered into an agreement.
B. is always present when moral hazard arises.
C. relates to unobserved characteristics of people or goods and occurs before the parties have entered into an agreement.
D. All of these statements are true.
C. relates to unobserved characteristics of people or goods and occurs before the parties have entered into an agreement.
You might also like to view...
The profit of a perfectly competitive firm is maximized at a level of output where its marginal cost is rising
a. True b. False Indicate whether the statement is true or false
An increase in the demand for loanable funds increases the equilibrium interest rate and increases the equilibrium level of saving
a. True b. False Indicate whether the statement is true or false