Which of the following statements is false?

Question

Quizplus · Accepted Answer

All statements are true. Asymmetric information can exist before a transaction (such as when a buyer does not know the true condition of a used car) and after a transaction (such as when a seller hides a defect in the product). Moral hazard occurs when one party has more information or power than the other and behaves in ways that are hidden and costly to the other party. Adverse selection occurs when one party has more information than the other, leading to a misallocation of resources or the collapse of a market.

Which of the Following Statements Is False