Mr.Smith put his laptop up for sale.He was aware of the fact that the laptop malfunctioned frequently.However,none of the potential customers who came to buy the laptop were able to discover the problem.One of them actually bought it at a remunerative price.This occurred because of the presence of ________.
A) asymmetric information
B) positive externalities
C) negative externalities
D) the moral hazard problem

Question

Quizplus · Accepted Answer

The situation described is an example of asymmetric information, where the seller has more information about the product than the buyers. The seller knows that the laptop has frequent malfunctions, but the potential buyers are not aware of this. This information asymmetry allows the seller to sell the laptop at a higher price than it would fetch if the buyers had complete information about the product.

MrSmith Put His Laptop Up for Sale