Which of the following is a prominent solution to adverse selection in used car markets?
A) Well-defined property rights of citizens
B) The imposition of a price ceiling in the used car market
C) The imposition of a price floor in the used car market
D) Third-party certification of used cars

Question

Quizplus · Accepted Answer

Third-party certification of used cars is a prominent solution to adverse selection in used car markets. This involves an independent third party examining the vehicle and providing a report on its condition, which can reduce the information asymmetry between buyers and sellers and increase market efficiency. Well-defined property rights and price controls are not effective solutions to adverse selection in used car markets.

Which of the Following Is a Prominent Solution to Adverse