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) equally likely.
B) relatively unlikely.
C) more likely.
D) not expected.

Question

Quizplus · Accepted Answer

Adverse selection is less likely in the used Toyota market because their reputation for quality and durability reduces the information asymmetry between buyers and sellers. Buyers are more confident in the quality of used Toyotas, reducing the risk of purchasing a "lemon."

Toyotas Are Known for Their Quality and Durability