The Problem Created by Asymmetric Information Before the Transaction Occurs

question 118

Multiple Choice

The problem created by asymmetric information before the transaction occurs is called ________,while the problem created after the transaction occurs is called ________.

• A)adverse selection;moral hazard
• B)moral hazard;adverse selection
• C)costly state verification;free-riding
• D)free-riding;costly state verification

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Definitions:

Sudden Infant Death Syndrome

An unexplained event, often occurring during sleep, that results in the death of an otherwise healthy infant, typically less than a year old.

Postpartum Psychosis

A serious and rare postpartum mental illness thought to be biologically based and related to hormonal changes.

Postpartum Depression

A form of depression thought to be related to hormonal changes following the delivery of a child.