If information in the market for used motorcycles is symmetric and both buyers and sellers are equally ignorant, then
A)the market is efficient.
B)both good and bad motorcycles will sell for the same price.
C)if only good motorcycles are sold, the price would be higher.
D)All of the above.

Question

Quizplus · Accepted Answer

In a market with symmetric information, where both buyers and sellers have the same level of knowledge (or lack thereof), the market can still be efficient because all parties have equal access to information. Both good and bad motorcycles would sell for the same price because neither buyers nor sellers have additional information to differentiate between the quality of motorcycles. If only good motorcycles were sold, their price would indeed be higher because the average quality of motorcycles in the market would be higher, and this would be reflected in the price, assuming buyers and sellers could somehow ascertain that only good motorcycles were being sold.

If Information in the Market for Used Motorcycles Is Symmetric