Question: Question 1 (10 marks/ Asymmetric information problem) Explain what is meant by asymmetric information in the trading process. (1 mark) Explain whether each of the

Question 1 (10 marks/ Asymmetric information problem) Explain what is meant by asymmetric information in the trading process. (1 mark) Explain whether each of the following situations involves adverse selection and moral hazard or not: (a) I am financing a new automobile. In applying for a loan, I withhold information about my student loan, and the loan does not show up on my credit report. (3 marks) (b) Just before quitting my job, I take out all the credit cards I can. I plan to run them up to the limit and declare bankruptcy. (3 marks) (c) I take out a loan to manufacture a product. My costs end up being higher than expected, and there seems to be little market for my product. I am unable to repay the loan on time

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