Which of the following is an example of asymmetric information leading to a "lemons" market?
A)A marketing manager at a firm cannot determine with certainty,the volume of sales in the next quarter.
B)An employee does not know the rate of inflation in the coming year and so cannot ascertain his real wage.
C)The seller of a used laptop knows more about the true condition of the laptop than the buyer.
D)A manager,who does not own the firm,does not have an incentive to ensure its profitability.
E)A trader,who has access to non-public information about a company,makes profits by trading on that information.

Question

Quizplus · Accepted Answer

In a "lemons" market, one party has more information about the product being sold than the other, resulting in the uninformed party being wary of purchasing the product. In this case, the seller of a used laptop knows more about its true condition than the buyer and may try to sell it for more than it is worth, resulting in the buyer being wary of purchasing it.

Which of the Following Is an Example of Asymmetric Information