The Problem of Adverse Selection Helps to Explain

question 69

Multiple Choice

The problem of adverse selection helps to explain

• A) which firms are more likely to obtain funds from banks and other financial intermediaries, rather than from securities markets.
• B) why collateral is an important feature of consumer, but not business, debt contracts.
• C) why direct finance is more important than indirect finance as a source of business finance.
• D) only A and B of the above.

---

Definitions:

Cellular Layouts

An arrangement of machinery or workspace in which workstations are grouped based on the product being produced, facilitating workflow.

Manufacturing Technology

The tools, machinery, and systems used in the production of goods, which can include advanced robotics, computer automation, and innovative production techniques.

Computer-integrated Manufacturing

A system of manufacturing in which the entire production process is controlled by computer, including design, engineering, production, and inventory control.

Manufacturing Technology

The study and application of various tools, machinery, and techniques used to produce goods in an industrial setting.