When analysing labour and used car markets, economists recognise the existence of:
A)hidden action
B)hidden characteristics
C)none of the above
D)all of the above

Question

Quizplus · Accepted Answer

In the analysis of labor and used car markets, economists recognize both hidden action and hidden characteristics. Hidden action relates to situations where one party's actions are not fully observable by the other (e.g., an employee's effort level), while hidden characteristics refer to aspects of a good or individual that are not known before a transaction (e.g., the quality of a used car). Both concepts are crucial in understanding information asymmetry in these markets.

When Analysing Labour and Used Car Markets, Economists Recognise the Existence