The major prediction of the lemons model is that

Question

Quizplus · Accepted Answer

The lemons model predicts that the presence of asymmetric information, where the seller knows more about the quality of the good than the buyer, will result in the average quality of goods for sale being reduced. This is because buyers are wary of paying a high price for a good that may turn out to be of low quality. Therefore, sellers of high-quality goods are discouraged from entering the market, while sellers of low-quality goods are encouraged to sell. This results in a market with lower average quality.

The Major Prediction of the Lemons Model Is That