Workshop 10 Banking and market failure Please indicate the correct answers (there may be more than 1) 1. The most important source of funding for business is: a) Retained earnings b) Issuing company bonds c) Issuing share capital d) Borrowing from banks 2. The "Lemons Problem" arises in financial markets because: a) Consumers are stupid when buying financial products b) Consumers only choose financial products on price alone c) Consumption mistakes leave a bitter taste and deter future purchases d) Consumers find it hard to judge the quality of financial products 3. Given the "Lemons Problem" buyers will only pay: a) The price of a "lemon" b) The price that reflects average quality c) The price that reflects marginal cost d) The price that reflects high quality