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Discuss both moral hazard and adverse selection issues

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Reference no: EM131752513

Your product fails about 2% of the time, on average. Some customers purchase the extended warranty you offer in which you will replace the product if it fails. Would you want to price the extended warranty at 2% of the product price? Discuss both moral hazard and adverse selection issues. (Note: NO, not making money)

Reference no: EM131752513

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