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Jonas would like to buy a used banjo, but he is not an expert on instruments and, thus, cannot assess the quality of the banjo directly without playing it for an extended period

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Jonas would like to buy a used banjo, but he is not an expert on instruments and, thus, cannot assess the quality of the banjo directly without playing it for an extended period. Jonas believes that owner who have not taken proper care of their banjos are more willing to sell than owners who have maintained their banjos well. Because of this, Jonas believes that banjos up for sale are probably lower quality.

1.

Which of the following economic problems is characterized in the story?

a) Moral hazard.

b) Government failure.

c) Adverse selection.

d) The free-rider problem.