Multiple Choice
Use the following information for questions
There are three types of cars, the good G, the bad B, and the ugly U.A G car is worth $40, a B car is worth $20, and a U car is worth $15.The seller knows the precise quality of his car, but the buyer cannot distinguish the difference in the quality of a car offered for sale.There is an equal probability of a car being G, B, or U.
-A possible warranty scheme that can ensure incentive compatibility in question 20 is $g, $b, $u
A) $50, $45, $5
B) $45, $15, $0
C) $45, $35, $0
D) $50, $5, $0
E) $25, $12.5, $0
Correct Answer:

Verified
Correct Answer:
Verified
Q11: Which of the following statements is are
Q12: In a market with asymmetric information,<br>A)market failure
Q13: A time-consistent policy is one where<br>A)the parties
Q14: When there is moral hazard between a
Q15: Consider a firm with risky debt outstanding
Q17: In a two-players 1 and 2 non-cooperative
Q18: Use the following information for questions <br>There
Q19: A moral hazard problem can exist between<br>A)a
Q20: Adverse selection is a situation where<br>A)a party
Q21: Use the following information for questions <br>There