Sellers will opt out of markets in which
A) there are significant negative externalities.
B) standardized products exist.
C) there are only foreign buyers.
D) information about buyers is inadequate, and some buyers can impose high costs on the sellers.

Question

Quizplus · Accepted Answer

In markets where there is inadequate information about buyers and some buyers can impose high costs on the sellers, sellers may opt out because they face a high risk of loss. This is due to the asymmetry of information between buyers and sellers, which can make it difficult for sellers to assess the risks associated with each potential buyer. As a result, they may choose to avoid such markets altogether. Negative externalities (A) and standardized products (B) may be factors that affect the competitive environment in a market, but they do not necessarily lead sellers to opt out. The presence of foreign buyers (C) may actually increase opportunities for sellers, as they can expand their customer base and potentially sell at higher prices.

Sellers Will Opt Out of Markets in Which