
-The market for used cars is shown in the above figure.Neither buyers nor sellers can tell whether any given car is a lemon.Forty percent (40%) of all cars are lemons.Which of the following statements is true?
A) All of the cars will be sold at $1,600.
B) Sellers of good-quality cars are implicitly subsidizing the sellers of lemons.
C) The information is symmetric and the market is efficient.
D) All of the above.
Correct Answer:
Verified
Q7: Adverse selection occurs when
A) a person takes
Q9: Q13: Q22: Asymmetric information will always cause Q26: Used car buyers will believe that a Q30: Which of the following reduces the effects Q39: Adverse selection occurs when an agreement encourages Q48: If bad drivers can usually avoid being Q50: A physical examination is NOT a good Q60: How can a warranty at the seller's![]()
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A) efficiency problems.
B)
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