Assume that both high and low quality appliances are sold in the used appliance market. If we assume asymmetric information with sellers having more information regarding quality than buyers, which of the following is necessarily true? The
A) fraction of high quality appliances will be greater than under perfect knowledge.
B) fractions of high and low quality appliances will be the same as with perfect information.
C) fraction of high quality appliances will be less than with perfect information.
D) none of the above
C
You might also like to view...
Which of the following is NOT a characteristic of competitive markets?
A) standardized product B) purchases and sales of individual traders are small relative to the total volume traded C) prices adjust quickly D) there are relatively few sellers
Which of the following is an example of a situation that would create an oligopoly? a. Boron InfoTech installs fiber optic cables throughout the community so that adding new customers incurs very little marginal cost. b. Aaron Super-sports has patented a super-grip glove that can be used for hiking
c. AquaHuman Mineral Water can only produce two-fifths of the market demand at the minimum point of the average total cost curve. d. Finch Brothers, a publishing house, holds the copyright for a popular superhero trilogy.