Moral Hazard Results from _____ Information and Adverse Selection Results

question 41

Multiple Choice

Moral hazard results from _____ information and adverse selection results from _____ information.

• A) private; private
• B) private; public
• C) public; private
• D) public; public
• E) None of the above answers are correct because both are the result of the lemons problem.

---

Definitions:

Positive Wording

The practice of choosing words that reflect a positive, constructive attitude instead of a negative one.

Extended Warranty

A service contract that extends the warranty period of a product beyond what is offered by the manufacturer.

Replacement Parts

Components that are substituted for the original parts of an item, often due to damage or wear.

Direct Strategy

A communication method that involves straightforwardly presenting the primary message at the beginning of the communication.