Multiple Choice
The owner of an apartment building is deciding what rent to charge and how to cover any damages. A lease with a monthly rent of $1,000 would cover expenses, including normal wear and tear but no additional damage. Which of the following lease options would create an adverse selection of buyers due to private information?
A) Rent of $1,000 plus a one-time, nonrefundable cleaning fee of $300.
B) Rent of $1,100 plus a security and cleaning deposit of $500 that will be refunded less any damage repairs or cleaning.
C) Rent of $1,000 plus a security and cleaning deposit of $1,500 that will be refunded less any damage repairs or cleaning.
D) Rent of $1,300.
Correct Answer:

Verified
Correct Answer:
Verified
Q133: Sellers may choose not to sell a
Q134: Jane builds her home in an area
Q135: Natalia is graduating from university and seeking
Q136: The solutions to adverse selection in a
Q137: How can adverse selection problems due to
Q139: Rihanna would like a better car, and
Q140: Moral hazard becomes a greater problem to
Q141: Which of the following statements is consistent
Q142: Explain why markets fail when sellers know
Q143: State Farm sells life insurance through affiliated