Questions from Financial Markets

Q: CarMax offers a solution to the lemons problem in the used car

CarMax offers a solution to the lemons problem in the used car market. What other ways might the lemons problem be resolved?

Q: Many automobile insurance policies require a deductible to be paid by the

Many automobile insurance policies require a deductible to be paid by the insured. A deductible is a tool to help control for which problem?

Q: Akerlof changed the conditions of perfect competition by adding in what factor

Akerlof changed the conditions of perfect competition by adding in what factor that often occurs in real life?

Q: How does the existence of “free riders” help to perpetuate

How does the existence of “free riders” help to perpetuate the adverse selection problem?

Q: It is often stated that “we live in an information age

It is often stated that “we live in an information age,” yet the adverse selection problem still exists. Why?

Q: Which government regulatory agency was created, in great part, to

Which government regulatory agency was created, in great part, to help overcome the adverse selection problem in equity markets?

Q: what is the relationship between the principle–agent problem in corporate

what is the relationship between the principle–agent problem in corporate governance and the moral hazard problem?

Q: Explain how compensating balances help to resolve the moral hazard problem in

Explain how compensating balances help to resolve the moral hazard problem in bank lending.

Q: High deductibles are used in which financial market to help address the

High deductibles are used in which financial market to help address the moral hazard problem?

Q: Explain why economies without banks suffer from high search costs.

Explain why economies without banks suffer from high search costs.