Goods X and Y both have an average quality index of 50.For good X,the lowest quality is 45 and highest quality is 55.For good Z,the lowest quality is 25 and the highest quality is 75.One would predict that the lemons model will

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Quizplus · Accepted Answer

The lemons model suggests that markets with a wider range of quality (like good Z with a range of 25 to 75) are more likely to suffer from information asymmetry, leading to adverse selection.

Goods X and Y Both Have an Average Quality Index