UGC NET Economics Q59

Question

Which of the followings are true pertaining to the problems of asymmetric information?
A. Sellers can deal with the problem of asymmetric information by sending buyers signals about the quality of product.
B. If a seller of a product has better information about its quality than buyer, then bad products tend to drive good products out of the market.
C. According to the efficiency wage theory, a wage lower than the competitive wage increases worker productivity by discouraging workers from shirking on the job.
D. Adverse selection arises because of asymmetric information in insurance market.
E. Owners can avoid principal agent problem by designing contracts that give their agents incentive to perform better.
Choose the correct answer from the options given below:

Accepted Answer

B, C & D Only