People drive faster when they have auto insurance. This is an example of: a. Adverse se
People drive faster when they have auto insurance. This is an example of:
a. Adverse selection.
b. Asymmetric information.
c. Moral hazard.
2. Government inspectors who check on the quality of services provided by retailers as well as government requirements for licensing in various professions are both attempts to resolve:
a. The moral hazard problem.
b. The asymmetric information problem.
3. True or False: A market may collapse and have relatively few transactions between buyers and sellers if buyers have more information than sellers.