8 Webslt ur Bibliog Helen owns a lawn care firm, and she hires students to mow l

Question

8 Webslt ur Bibliog Helen owns a lawn care firm, and she hires students to mow lawns. She pays each student a fixed hourly wage rate. cc.edu ou create David also owns a lawn care frm, that hires students to mow lawns. David pays the students for each lawn mowed. works cite Adverse selection tells us that de me dar YouTu A. omployers cannot beneft from privato information O B. in the long run, Helen and David will use the same compensation method C. David's compensation agreement adversely selects tose with private information 0 D. Helen attracts lazy students and David attracts hard-working students Shotmail.c o Vasquez s YouTu Gallery b e with byrics ube mp37 r favorite org os as mp3 Click to select your answer 01/15/18 11:59pm ASSESS Chapter 17 Quiz 3 5

Explanation / Answer

The right answer is option D.

Explanation: Under adverse selection, the buyers have information which the sellers do not have or the sellers have information which the buyers do not have. Here, Helen and David are buyers or labor and students are sellers of labor. Helen and David do not have information regarding which students are lazy and which are hard-working. Therefore, lazy students will look for a fixed-income job and hard-working ones will look for a job which pays more with more efforts.  

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