Which of the Following Statements Is True

question 93

Multiple Choice

Which of the following statements is true?

• A) Adverse selection is a problem of monopoly and moral hazard is a problem of information asymmetry.
• B) Adverse selection and moral hazard are problems stemming from asymmetric information.
• C) Adverse selection is a problem that occurs after a transaction.
• D) Moral hazard is a problem that occurs before a transaction.

---

Definitions:

Power Steering Pump

The gear- or belt-driven pump that supplies pressurized fluid to the steering gearbox.

Vacuum

In an engine, air pressure that is lower than atmospheric pressure.

Hydro-Boost

A power brake booster that uses hydraulic pressure from the power steering system to assist in braking.

Power Steering System

A system in vehicles that uses hydraulic or electric power to assist the driver in steering, reducing manual effort.