The effects of asymmetric information in the car market can be weakened by:
A)providing a warranty for the product.
B)purchasing business interruption insurance.
C)inserting a "buyer beware" clause in the agreement.
D)buying a "put" option.

Question

Quizplus · Accepted Answer

Providing a warranty for the product can help alleviate the effects of asymmetric information by reassuring the buyer that the car is of good quality and that the seller is willing to stand behind the product. This can help to address any concerns the buyer may have about buying a car with unknown mechanical problems or defects. Business interruption insurance, a "buyer beware" clause, and buying a "put" option are not likely to have the same impact on the buyer's perception of the car's quality or on the reduction of asymmetric information.

The Effects of Asymmetric Information in the Car Market Can