Which of the Following Is Not True of Adverse Selection

question 104

Multiple Choice

Which of the following is not true of adverse selection?

• A) It can result when one of the parties to a transaction has little information about the quality of the goods involved.
• B) It can cause the quality of goods traded to fall, if quality detection costs are high.
• C) It can be a difficult problem to overcome, because it is not individually rational for the transactor with the superior information to provide a truthful and complete disclosure.
• D) All of the above are true.

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