In the Market for Used Air Rifles, the Overwhelming Majority

question 7

Multiple Choice

In the market for used air rifles, the overwhelming majority of rifles for sale do not shoot very accurately. This situation is an example of _____ and results from _____.

• A) signaling; adverse selection
• B) moral hazard; symmetric information
• C) adverse selection; asymmetric information
• D) an agent problem; moral hazard

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Definitions:

Government

The governing body of a nation, state, or community which is responsible for making and enforcing laws and managing public resources and affairs.

Rationing Mechanism

a system or policy by which scarce goods or services are distributed.

Market Economies

Market economies are economic systems in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses with minimal government intervention.

Adjustment

The process of modifying something to achieve a desired outcome, often used in the context of economic policies, mechanisms, or personal changes.