The ________ problem helps to explain why the private production and sale of information cannot eliminate ________.
A)free-rider;adverse selection
B)free-rider;moral hazard
C)principal-agent;adverse selection
D)principal-agent;moral hazard

Question

Quizplus · Accepted Answer

The free-rider problem occurs when individuals obtain a benefit without paying for it. In the context of information, this means that individuals can access information without paying for it, which makes it difficult for providers of information to earn profits. Adverse selection occurs when buyers and sellers have different information about a product or service, which can result in the market being dominated by lower-quality products. The private production and sale of information cannot eliminate the free-rider problem because it is difficult to prevent individuals from obtaining access to information without paying for it.

The ________ Problem Helps to Explain Why the Private Production