Which of the following is NOT a method used by a government to reduce adverse selection due to buyers' private information in a product market?
A)The government imposes laws with penalties for insurance fraud.
B)The government provides insurance to all and pays for it with tax revenue.
C)The government helps the population become less risk-averse.
D)The government subsidizes the cost of insurance so that more people buy it.

Question

Quizplus · Accepted Answer

The government helping the population become less risk-averse is not directly a method of reducing adverse selection due to buyers' private information. The other choices all involve some form of government intervention to address adverse selection. A involves penalties for insurance fraud, B involves a government-provided insurance program, and D involves a subsidy to encourage more people to buy insurance.

Which of the Following Is NOT a Method Used by a Government