Explain adverse selection problem

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Come up with an example of adverse selection, explain why it is an adverse selection problem. Explain why this could lead to "market failure," i.e., why total surplus will not be maximized.

Come up with an example of a moral hazard, explain why it is a moral hazard problem. Explain why this could lead to "market failure," i.e., why total surplus will not be maximized.

Reference no: EM133066978

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