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11. The mechanisms to reduce the risk of imperfect information include:

a. Money-back guarantee

b. warranty

c. service contract

d. all of the above

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Raushan Raj
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2 Nov 2020

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Related questions

15. Markets have many ways to deal with imperfect information. These include:

a. In goods markets, buyers facing imperfect information about products may depend upon money-back guarantees, warranties, service contracts, and reputation.

b. In labor markets, employers facing imperfect information about potential employees may turn to resumes, recommendations, occupational licenses for certain jobs, and employment for trial periods.

c. In capital markets, lenders facing imperfect information about borrowers may require detailed loan applications and credit checks, cosigners, and collateral.

d. all of these

14. In the financial capital market, for example, before a bank makes a loan, it undertakes the following to reduce the risk on account of imperfect information:

a. to require a cosigner on a loan

b. the bank conducts a credit check on the individual’s past borrowing

c. yet another approach is to require collateral

d. all of these

6. The two major problems of imperfect information in insurance markets include:

a. moral hazard 

b. adverse selection

c. unfair treatment

d. only a and b

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