The "lemons" problem is used to explain the concept of:
A)complete information.
B)adverse selection.
C)moral hazard.
D)collective bargaining.

Question

Quizplus · Accepted Answer

The "lemons" problem is a classic example in economics of adverse selection, where one party to a transaction has access to information that the other party does not, resulting in unequal bargaining power and potentially negative outcomes for the uninformed party. In the case of the "lemons" problem, a seller knows more about the quality of the product they are selling than the buyer, which can lead to a situation where only low-quality products (or "lemons") are sold, as the seller of high-quality products will not want to sell at the same price as the low-quality products.

The "Lemons" Problem Is Used to Explain the Concept Of