This question will be sent to your instructor for grading 39 Read the scenarios in the following table and, for each one, determine whether it illustrates a problem of adverse selection or moral hazard Wite your answer in the last column Adverse Selection or This question will be sent to your instructor for scenario Adverse Selection or Moral Hazard? Carl buys a used car. The seller tells him the car is "like new" with a new transmission. A month after he buys the car, the transmission fails. The mechanic says it is old and needs to be replaced. Jackson plans an expensive dinner for his girlfriend and orders a bottle of gourmet wine. The restaurant charges him the gourmet price but substitutes a much cheaper bottle of wine without him knowing it. After June purchases homeowners insurance, she decides to get rid of the home security system that requires a monthly maintenance fee. Pat decides to purchase the additional coverage offered when he buys a new smartphone because he knows that he is not very careful and is likely to damage the device. Gopal is searching for a bond investment and cannot tell which borrowers are good or bad credit risks. He settles on requiring a risk premium equal to at least the average risk. He ends up with a high-risk borrower. ABC, Inc. is a large financial institution. Managers know that, if the institution fails, it will destroy the financial system. They take on more risk, as a result