The lemons principle
A)indicates that jewels can pass as lemons.
B)indicates that lemons can pass as jewels.
C)has the moral hazard problem at it root.
D)states that making good lemonade is as tough as learning economics.

Question

Quizplus · Accepted Answer

The lemons principle suggests that something of low quality (like a lemon) can be presented as something of higher quality (like a jewel). This can lead to a moral hazard problem, where the buyer is deceived and the seller has no incentive to improve the quality of their product.

The Lemons Principle