If the market for used computers has only lemons (low-quality computers) then the market
A) is an example of a thick market.
B) suffers from an adverse selection problem.
C) is a type of monopoly.
D) must be monopolistically competitive.

Question

Quizplus · Accepted Answer

The market for used computers suffering from an adverse selection problem because of the presence of only low-quality computers (lemons). The buyers of used computers would be hesitant to purchase them, as they cannot distinguish between good quality and low-quality computers. This is known as adverse selection, where only one type of product is available in the market.

If the Market for Used Computers Has Only Lemons (Low-Quality