Explain how adverse selection and moral hazard will lead, Financial Management

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Explain how adverse selection and moral hazard will lead

Your firm has been renting video games to teenagers for $5 rental when your marginal cost is $3. Typically, your customers rent three games per month. You are exploring a bundling option in which customers can pay a subscription fee per month for unlimited rentals per month. Explain how adverse selection and moral hazard will lead you to adopt a price other than $15 per month.

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Financial Management: Explain how adverse selection and moral hazard will lead

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Financial Management: Explain how adverse selection and moral hazard will lead

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