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Adverse Selection Refers to Those with High Credit Risks,being Most

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Adverse selection refers to those with high credit risks,being most aggressive in their search for funds.


Definitions:

Long-Run Equilibrium

A state in which all factors of production can be adjusted, market supply equals demand, and economic agents have no incentive to change their behavior, leading to a steady-state market condition.

Competitive Industry

An economic sector characterized by a large number of firms that compete with each other to sell similar products or services, leading to efficiency and innovation.

Price

The cost anticipated, necessary, or paid out in return for acquiring something.

Long-Run Price

The price level at which economic forces such as supply and demand are balanced over a longer time frame, considering all inputs are variable.

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