Two Types of Problems That Arise Due to Asymmetric Information

question 78

Multiple Choice

Two types of problems that arise due to asymmetric information are:

• A)systematic risk and idiosyncratic risk.
• B)risk aversion and diversification.
• C)illiquidity and insolvency.
• D)moral hazard and adverse selection.

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Definitions:

Consumer Tastes

Preferences and desires of consumers regarding the choice of products or services, influencing market demand.

Traditional Management Rights

The rights inherently held by employers to make operational decisions, including hiring, work assignments, and terminations, without needing union approval or negotiation.

Canadian Joint Industrial Councils

Advisory bodies in Canada that bring together representatives from labor and management to discuss issues affecting their industries.

Nonunion Representation

Representation of workers' interests in the workplace without the formal structure or support of a labor union.