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An Example of Adverse Selection Is

Question 3

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An example of adverse selection is


A) when high-quality loan applicants drive low-quality loan applicants out of the market for bank loans.
B) when a person discovers that he has a serious illness and then purchases health insurance.
C) when consumers are not willing to pay top dollar for a used car because of imperfect information.
D) All of the above are examples of adverse selection.

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