The Problem Created by Asymmetric Information Before the Transaction Occurs

question 118

Multiple Choice

The problem created by asymmetric information before the transaction occurs is called ________,while the problem created after the transaction occurs is called ________.

• A)adverse selection;moral hazard
• B)moral hazard;adverse selection
• C)costly state verification;free-riding
• D)free-riding;costly state verification

---

Definitions:

Single-tier System

A healthcare system in which all citizens have access to the same level of healthcare services, regardless of their personal income or social status.

Two-tier System

A system, often in healthcare, where two levels of service are available, with the higher quality or faster service being accessible to those who can pay more.

Three-tier System

A framework divided into three levels, often used to describe a particular hierarchy or system within a specific domain, such as alcohol distribution or data storage.

Kai Nielsen

A Canadian philosopher known for his work in ethics, philosophy of religion, and political philosophy, advocating atheism and humanism.