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

Economists recognize both hidden action and hidden characteristics in labour and used car markets. Hidden action refers to situations where one party cannot observe the actions of another (e.g., employer-employee relationships), while hidden characteristics refer to situations where one party has more information about a product or service than another (e.g., sellers knowing more about the condition of a used car than buyers).

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