Question
In which of the following products, problem of adverse selection is encountered?
The correct answer is
Both (1) and (2)
Adverse selection arises from hidden information before contracting. Insurers may attract disproportionately high-risk applicants, and lenders may attract borrowers with riskier projects. Hence it occurs in both insurance and credit markets.
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Important Questions from Microeconomics
- Match the following List-I with List-II :Choose the correct option :
LIST-I LIST-II 1. Absolute Advantage a. Paul Rosenstein Rodan 2. Theory of Big Push b. Adam Smith 3. Theory of low level Equilibrium trap c. Richard R. Nelson 4. Balanced Growth Theory d. Ragner Nurkse - Managerial Economics is essentially __________ in the field of business management.
- Kumar used to eat 30 samosas in a month when the price of each samosa was ₹12. When the price of samosa increased to ₹15 per piece, he eats only 20 samosas a month. What is the price elasticity of demand for samosa by Kumar?
- Mobile phone operators market in India is an example of
- According to the Law of Diminishing Returns, in a production function when more and more units of the variable factor are used, holding the quantities of a fixed factor constant, a point is reached beyond which
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