In some markets for used goods
A) the seller has more information than the buyer about the quality of the good.
B) the buyer has more information than the seller about the quality of the good.
C) low-quality used goods will be underpriced.
D) the quality of used goods sold in the market will typically rise over time.

Question

Quizplus · Accepted Answer

In some markets for used goods, the seller has more information than the buyer about the quality of the good. This is because the seller is the one who has used or owned the good, and therefore has a better understanding of its condition and any potential issues. This information asymmetry can lead to a "lemons problem" where buyers are hesitant to purchase used goods due to the risk of receiving a low-quality item.

In Some Markets for Used Goods