In the absence of asymmetric information, the lemons problem ________.
A) goes away
B) becomes worse
C) is not important
D) remains the same

Question

Quizplus · Accepted Answer

The lemons problem arises due to the presence of asymmetric information, where one party has more information than the other. In the absence of such information asymmetry, the lemons problem would not arise, and the market would function efficiently without any adverse selection issues. Therefore, the lemons problem goes away in the absence of asymmetric information.

In the Absence of Asymmetric Information, the Lemons Problem ________