As Akerlof Argues, Sellers Who Have a Lemon, of Course

question 6

Multiple Choice

As Akerlof argues, sellers who have a lemon, of course, know they have lemon but are not willing to tell the truth about the condition of their auto and, for the short selling period involved, can put their auto in a satisfactory condition that approximates the normal condition of the auto that are not lemons.In subsequent literature, this problem called the _______ problem.

• A)informational asymmetry
• B)agency
• C)moral hazard
• D)certification

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Definitions:

Holy Roman Empire

A multi-ethnic complex of territories in central Europe that developed during the Early Middle Ages and continued until its dissolution in 1806.

Lion of the North

A nickname given to King Gustavus Adolphus of Sweden, who was a prominent military leader during the Thirty Years' War and known for his innovative tactics and leadership.

Gustavus Adolphus

was a Swedish king (1611-1632) known for his military leadership during the Thirty Years' War and for making Sweden a major European power.

Concordat of Bologna

An agreement made in 1516 between King Francis I of France and Pope Leo X, allowing the French king to select French bishops and abbots.