________ Occurs When an Informed Person Takes an Action to Send

question 101

Multiple Choice

________ occurs when an informed person takes an action to send information to an uninformed person,and ________ occurs when an uninformed person creates an incentive for an informed person to reveal private information.

• A) Moral hazard; adverse selection
• B) Adverse selection; moral hazard
• C) Signaling; screening
• D) Screening; signaling
• E) Pooling; separating

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Definitions:

Distributing

The process of delivering or spreading out goods, services, or resources from a central point to multiple recipients or locations.

Estate

The total of all the property, assets, and debts left by an individual at death, or the property entrusted to an individual during their lifetime.

Trust

(1) A business arrangement in which stock owners appoint beneficiaries and place their securities with a trustee, who manages the company and pays a share of the earnings to the stockholders. (2) An estate-planning arrangement whereby a person transfers property to another person and the property is used for the benefit of a third person.

Transfer Property

The act of legally changing ownership of property or assets from one party to another.