Toyotas are known for their quality and durability.As a result, compared to other used car markets, adverse selection in the used Toyota market is:
A)just as likely to occur.
B)less likely to occur.
C)more likely to occur.
D)not expected to occur.

Question

Quizplus · Accepted Answer

Adverse selection occurs when buyers are unable to distinguish between low-quality and high-quality goods in a market. As Toyotas are known for their quality and durability, buyers are more likely to perceive all used Toyotas as high-quality, reducing the likelihood of adverse selection in this market. Therefore, adverse selection in the used Toyota market is less likely to occur compared to other used car markets.

Toyotas Are Known for Their Quality and Durability