One implication of the lemons problem is that:
A)a used car only a few days old will often sell for less than a new car of the same type
B)many people have an incentive to buy vehicles in the used car market
C)used cars have a market value almost identical to that of new cars
D)buyers are just as aware of vehicle defects as the sellers of used cars

Question

Quizplus · Accepted Answer

The lemons problem states that in a market with asymmetrical information, where the seller knows more about the quality of the product than the buyer, the buyer will be hesitant to pay full price for the product for fear of purchasing a "lemon" or a defective product. This results in lower prices for all products in the market, including those that are of high quality, such as a used car that is only a few days old. Therefore, choice A is the best answer.

One Implication of the Lemons Problem Is That