Which of the following is not an example of an adverse selection problem?
a. A homeowner purchases a refrigerator that the seller knows has a history of leaking.
b. A highly productive worker quits her job after a salary cut knowing that she can make more at a different job.
c. A major league baseball player performs poorly in his second season after signing a multi-million dollar contract.
d. A contractor uses low quality materials for construction but charges for higher quality materials.
c
You might also like to view...
By raising the discount rate, the Fed leads banks to make ______ loans to households and firms, which will _________ checking account deposits and the money supply
A. More; decrease B. Fewer; decrease C. Fewer; increase
Net foreign investment is a measure of net capital outflows, equal to capital outflows minus capital inflows in a given period of accounting
Indicate whether the statement is true or false