​Which Firm Is Not Dealing with Adverse Selection

question 15

Multiple Choice

​Which firm is not dealing with adverse selection

• A)​a manufacturer requires a 90 day probationary period for new employees
• B)a temporary clerical agency requires a typing test
• C)a manufacturer requires suppliers to be ISO 9000 certified
• D)​Smokers get the same life insurance rates as non-smokers

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Definitions:

Market Failures

Situations where the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.

Private Goods

Goods that are excludable and rivalrous in consumption, meaning access can be limited and consumption by one individual prevents others from consuming the same good.

Public Goods

Goods that are non-excludable and non-rival in consumption, meaning they are available for everyone to consume regardless of who pays and one person's consumption does not reduce availability to others.

Reward Power

The ability of an individual to influence the behavior of others by offering or withholding incentives.