Adverse Selection

question 169

Multiple Choice

Adverse selection

• A)occurs when the overall quality of choices facing a consumer is very low.
• B)is a greater problem for employees than employers.
• C)occurs more frequently in the market for new cars than used cars.
• D)is not easily remedied by free markets.

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Definitions:

Merchant Customer

A consumer who has a commercial relationship with a business or merchant, typically involving the purchase of goods or services.

Dispatch

The act of sending something or someone to a specific destination or for a certain purpose.

Acceptance

The act of agreeing to receive something offered or the acknowledgment of a new contractual proposal.

Predominant-Purpose Test

A legal test used to determine the primary objective or nature of a contract when it serves multiple purposes, impacting enforcement and interpretation.