Nicole wants to avoid buying a car that is a lemon. She takes a car she would like to buy to her mechanic before she purchases it. This is known as

Question

Quizplus · Accepted Answer

Screening refers to the process of gathering information about the quality of a product or service before making a purchase. In this case, Nicole is screening the car by taking it to her mechanic before buying it, in order to avoid buying a lemon. Signaling, moral hazard, and adverse selection all refer to different aspects of asymmetric information and are not relevant to this scenario.

Nicole Wants to Avoid Buying a Car That Is a Lemon