Asymmetric information will lead to

Question

Quizplus · Accepted Answer

Asymmetric information occurs when one party has more or better information than the other party in a transaction. In the case of used cars, the seller usually has more information about the car's history and condition than the buyer. This can lead to buyers being wary of purchasing a "lemon" (a car with hidden defects) and therefore being willing to pay lower prices for used cars in general. As a result, good used cars may be undervalued and sell for "lemon" prices.

Asymmetric Information Will Lead to