There are many jokes about the laziness of civil servants. Do you think that those jokes contain an element of truth? Let us, for the sake of argument, suppose that government officials are lazier than employees working for a business firm. Can you explain this phenomenon by using the concepts of hidden information and hidden action? 

Discussed the market for lemons. The large price difference between new (unregistered) cars and ones that have just left the showroom can be explained by the information asymmetry between buyers and sellers of used cars: the seller knows if the car is a lemon but the buyer does not. Do you see another explanation for the large price difference between new cars and cars that have just left the showroom?

According to an article in the Financial Times, the used vehicle sales in China amounted to 4.3 million in 2012. This was roughly a quarter of the new car sales at 18.5 million. In the USA, used car sales are four times new sales, almost the inverse proportion. Can you give reasons which could explain this big difference?