If Adverse Selection Exists in a Market

question 73

Multiple Choice

If adverse selection exists in a market,

• A)the government steps in and shuts it down.
• B)the market is considered a "grey market."
• C)consumers may not participate in the market at all.
• D)total surplus is maximized.

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Definitions:

S Corporation

A corporation taxed as though it were a partnership with restrictions on shareholders.

Joint Venture

A partnership established for a specific project or for a limited time.