You May Be Unwilling to Buy a Used Car Because

Multiple Choice

You may be unwilling to buy a used car because you suspect the last owner found out the car was a lemon. You may treat a car you rented with a little less care than you'd use on your own car.

A) Both examples primarily illustrate adverse selection.
B) Both examples primarily illustrate moral hazard.
C) The first example primarily illustrates adverse selection; the second primarily illustrates moral hazard.
D) The first example primarily illustrates moral hazard; the second primarily illustrates adverse selection.