Adverse selection of sellers means that each of the following occurs EXCEPT
A)the market price falls when low-quality goods become common.
B)low-quality goods are a large share of what is for sale.
C)the low market price causes sellers of high-quality goods to leave the market.
D)high-quality goods sell at higher prices.

Question

Quizplus · Accepted Answer

Adverse selection of sellers typically leads to a market where low-quality goods dominate because high-quality goods cannot fetch a price that reflects their value, causing sellers of high-quality goods to exit the market. It does not mean that high-quality goods sell at higher prices; instead, it's difficult for them to be properly valued, leading to a market failure.

Adverse Selection of Sellers Means That Each of the Following