If buyers cannot assess the quality of used cars but there are warranties for cars
A) too few lemons are sold.
B) too many good used cars are sold.
C) good used cars are sold at a higher price than lemons.
D) there is an adverse selection problem.

Question

Quizplus · Accepted Answer

Warranties help signal the quality of good used cars, allowing them to be sold at a higher price than lemons, which lack such assurances.

If Buyers Cannot Assess the Quality of Used Cars but There