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Hazard problem and the adverse selection problem

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Explain the moral hazard problem and the adverse selection problem. Describe the difference between them, and discuss instances where these problems create difficulties for businesses.

Note that the answers to the discussion question fall under assymmetric information. I wanted to introduce these topics as it relates to public goods and the economy, since in the real world you'll see more cases of moral hazard and adverse selection than a perfectly competitive market. In any case, you essentially need to read that portion of chapter 17 or google it, it will not be on either exam.

Reference no: EM131395416

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