When a person wants to buy a used car, asymmetric information may land her with a “lemon” because:
a. neither she nor the dealer can know everything about the car.
b. a used car is in a lower-risk category for insurance purposes.
c. a used car that has been in an undisclosed accident could have alignment problems.
d. the car dealer knows more about the car than she does.
d. the car dealer knows more about the car than she does.
Many buyers face a situation of asymmetric information, where one party knows much more than the other.
You might also like to view...
Explain how comparative advantage, specialization and division of labor are related
What will be an ideal response?
Which landmark legislation made it illegal to engage in predatory pricing and also prohibited mergers if it led to weakened competition?
a. Sherman Act b. Robinson-Patman Act c. Cellar-Kefauver Act d. Clayton Act