Question
10.Consider the following statements: 1) Asymmetric information will always lead to the collapse of a market. 2) Government intervention is always necessary in cases of
10.Consider the following statements:
1) Asymmetric information will always lead to the collapse of a market.
2) Government intervention is always necessary in cases of asymmetric information.
Does George A. Akerlof make those claims in his paper, The Market for "Lemons"- Quality, Uncertainty and the Market Mechanism?
Select one:
a. Akerlof does claim statement 1is true, but does not claim statement 2is true.
b. Akerlof makes neither of these claims.
c. Akerlof does claim statement 2 is true, but does not claim statement 1 is true.
d. Akerlof makes both of these claims.
15. Suppose that a new medicine has a 25% chance of being effective and worth 1 $400 to the consumer. There is a 75% chance that the medicine is not effective and worth $0. What is the expected value of this medicine?
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