Which of the following is false?
A) Product liability laws can make it unprofitable to sell shoddy merchandise, providing a substantial incentive to provide safe products independent of government regulations.
B) Asymmetric information exists when the available information is initially distributed in favor of one party to a transaction relative to another.
C) In adverse selection situations, it is rational for a seller with more information about a product to provide a truthful and complete disclosure and make that fact known to a potential buyer.
D) Moral hazard arises from the fact that it is costly for an insurer to monitor the behaviors of the insured party.

Question

Quizplus · Accepted Answer

In adverse selection situations, sellers may have an incentive to withhold information or misrepresent a product to make it more appealing, rather than providing truthful and complete disclosure.

Which of the Following Is False