Question
1.Under what conditions does adverse selection arise? Which of the following are likely to encounter adverse selection problems? a) football souvenirs sold outside the stadium
1.Under what conditions does adverse selection arise? Which of the following are likely to encounter adverse selection problems? a) football souvenirs sold outside the stadium at various independent booths set up just for the game, b) purchase of brand name cereals like Kellogg's Frosted Flakes, c) online purchases of brand name goods through an online retailer E-Bay. For each state why or why not and what the seller could do to solve the adverse selection problem if it exists.
2.Nearly all of Proctor and Gamble's products (e.g., Crest toothpaste, Pampers disposable diapers, Oil of Olay skin products, Charmin tissue, various shampoos, etc.) are a dominant product in a monopolistically competitive industry. Are these products experience goods or search goods? Does the solution to the notorious firm problem also lend itself to a core function of the business which then leads to a particular market structure?
3.
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