One implication of the lemons problem is that:
A) a used car only a few days old will often sell for less than a new car of the same type
B) many people have an incentive to buy vehicles in the used car market
C) used cars have a market value almost identical to that of new cars
D) buyers are just as aware of vehicle defects as the sellers of used cars

Question

Quizplus · Accepted Answer

The lemons problem implies that used cars are often seen as lower quality than new cars, which leads to them being sold at lower prices. This is why a used car only a few days old can sell for less than a new car of the same type. Option B is not the best choice because it refers to the incentives of buyers, not the implications of the lemons problem. Option C is inaccurate because the lemons problem suggests that used cars are worth less than new cars. Option D is also not the best choice because the lemons problem suggests that buyers may not be fully aware of vehicle defects, which is why they may be willing to pay less for a used car.

One Implication of the Lemons Problem Is That