In Markets with Asymmetric Information

question 144

Multiple Choice

In markets with asymmetric information,

• A)moral hazard causes adverse selection which in turn causes asymmetric information.
• B)adverse selection causes moral hazard which in turn causes asymmetric information.
• C)asymmetric information causes moral hazard and then it causes adverse selection.
• D)asymmetric information causes adverse selection and then it causes moral hazard.

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Definitions:

Ratio

Shows the relative sizes of two or more values.

Quart

A unit of liquid volume equivalent to a quarter of a gallon, or approximately 0.946 liters.

Abbreviation

A shortened form of a word or phrase used to save space or time in written communication.

Numerator

The top number in a fraction that indicates how many parts of a whole are being considered.