Economist Adam Smith noted that in trade, different ethical standards seem to prevail in different situations. In a market environment where customers will never be seen again, there is a tendency towards:
A) market inefficiency.
B) sellers cheating on price or quality.
C) supply to not equal demand.
D) increased honesty in transactions.

Question

Quizplus · Accepted Answer

In a market where customers are not likely to be repeat buyers, selfish sellers may tend to prioritize their own short-term gain over long-term reputation and therefore may be more likely to cheat customers on price or quality. This is known as asymmetric information, where the seller has more information about the product than the buyer.

Economist Adam Smith Noted That in Trade, Different Ethical Standards