Unraveling is an economic theory that describes which of the following?
A)Low quality products will be quickly discovered and abandoned by buyers
B)High seller concentration leads to the development of many substitute products
C)Few sellers improve product quality once they have scale in production
D)Even low quality sellers will disclose their product quality
E)Consumers ultimately switch products regardless of quality

Question

Quizplus · Accepted Answer

Unraveling is a theory where even low-quality sellers disclose their product quality because if they don't, consumers will assume the worst, leading to a market where all sellers reveal their quality to avoid being perceived as the lowest quality.

Unraveling Is an Economic Theory That Describes Which of the Following