The lemons problem is due to
A) asymmetric information.
B) moral hazard.
C) hidden actions.
D) symmetric information.

Question

Quizplus · Accepted Answer

The lemons problem is a classic example of asymmetric information, where one party has more or better information than the other party, resulting in adverse selection. In this case, sellers have more information about the quality of the used cars they are selling than buyers, leading to the potential for low-quality (lemon) cars to flood the market at the same price as high-quality cars.

The Lemons Problem Is Due to