In which of the following cases is there an adverse selection problem? Select one correct answer.

a.

A home owner who is insured is halfway to work and realises he forgot to lock the back door. He decides it is not worth being late for work and doesn't return home to lock the door.

b.

A motor insurance market, in which the insurers do not know how carefully the insured people drive.

c.

A health insurance market, in which the insurers do not know whether or not the applicants for insurance are habitual smokers.

d.

A firm that employs home-workers, but cannot observe how hard they are working.