The lemons problem is associated with _________ and results in a market for items with only _______characteristics.

Question

Quizplus · Accepted Answer

The lemons problem is associated with adverse selection, which occurs when a market is dominated by individuals who have unreliable or incomplete information about the quality of a product, resulting in items with only undesirable characteristics being sold. Moral hazard, on the other hand, refers to a situation in which an individual has an incentive to take risks or engage in unproductive behavior because they are not fully responsible for the consequences of their actions.

The Lemons Problem Is Associated with _________ and Results in a Market