In the used car market,asymmetric information leads to the lemons problem because the price that buyers are willing to pay will

Question

Quizplus · Accepted Answer

Asymmetric information in the used car market means buyers cannot distinguish between high-quality and low-quality cars ("lemons"). Therefore, they are only willing to pay a price that reflects the average quality, which can drive high-quality cars out of the market.

In the Used Car Market,asymmetric Information Leads to the Lemons