When buyers cannot judge the quality of a good before buying, the market tends to be skewed toward
A)high prices.
B)lower-quality units.
C)average prices.
D)higher-quality units.

Question

Quizplus · Accepted Answer

When buyers cannot judge the quality of a good before buying, sellers of lower-quality goods are more likely to participate in the market, as buyers cannot differentiate between high and low quality. This leads to a market skewed toward lower-quality units, a phenomenon known as adverse selection.

When Buyers Cannot Judge the Quality of a Good Before