Which of the following is NOT an example of the efforts to reduce the adverse selection problem?
A. Sellers offer warranties.
B. Consumers invest in information.
C. Sellers offer money-back guarantees.
D. All of these are examples of efforts to reduce adverse selection.
Answer: D
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When studying individuals' economic behavior, economists assume that
A) individuals understand the rationale for all their actions. B) individuals act as if they were rational. C) only educated people act as if they were rational. D) self-interest is of limited relevance in predicting an individual's actions.
Maximum Feasible Hourly Production Rates (in Tons) of EitherWine or Beef Using All Available ResourcesProductArgentinaFranceWine (gallons)3060Beef (pounds)1030Use the above table. Assuming constant opportunity costs, if Argentina and France specialize based on comparative advantage, then they will trade if the rate of exchange
A. is 2.5 gallons of wine for 1 pound of beef, and Argentina imports beef. B. 0.2 pound of beef for 1 gallon of wine, and Argentina imports wine. C. 4 gallons of wine for 1 pound of beef, and France imports beef. D. 8 pounds of beef for 1 gallon of wine, and France imports wine.