In which of the following markets is the presence of asymmetric information most critical for the buyers?

Question

Quizplus · Accepted Answer

In the market for existing houses, buyers are often not fully aware of the condition and history of the house, while sellers may have more information about any defects, damages, or prior repairs. This information asymmetry can lead to adverse selection, where buyers may end up paying more than what the house is worth. So, the presence of asymmetric information is most critical for the buyers in the market for existing houses. In contrast, markets such as computers and paints typically have more readily available information and standardized products, reducing the likelihood of information asymmetry. The market for used textbooks may have some information asymmetry, but it may not be as critical as in the market for existing houses.

In Which of the Following Markets Is the Presence of Asymmetric