Because the seller of a used car has more information than the buyer, the problem of _____ occurs.
A)moral hazard
B)information overload
C)adverse selection
D)bargaining imbalance

Question

Quizplus · Accepted Answer

This scenario describes adverse selection, a situation where one party in a transaction has more or better information than the other, often leading to an imbalance in the transaction that can result in market inefficiency. In the context of a used car sale, the seller typically knows more about the car's condition than the buyer, potentially leading to the sale of lower-quality vehicles.

Because the Seller of a Used Car Has More Information