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Gerard Caingcoy
on Oct 26, 2024

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Adverse selection and moral hazard do not affect the efficiency of the market.

Adverse Selection

A scenario in economics where buyers and sellers have access to different information, leading to transactions where the seller is likely to sell goods of lower quality.

Moral Hazard

The risk that a party insulated from risk may behave differently than if they were fully exposed to the risk.

Market Efficiency

Market efficiency refers to the extent to which market prices reflect all available, relevant information, making it impossible to consistently achieve higher returns on investment without taking additional risk.

  • Comprehend the principle of adverse selection and its influence on market dynamics.
  • Understand the principle of moral hazard and its effect on the behavior of individuals and businesses.
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safia suufiOct 31, 2024
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