One way the "lemons problem" in the used-car market can be mitigated is by
A)raising the price of used cars.
B)hiring auto experts to sell used cars.
C)requiring sellers to guarantee trouble-free cars.
D)allowing owners to trade in their own cars when they purchase a used car.

Question

Quizplus · Accepted Answer

Requiring sellers to guarantee trouble-free cars can mitigate the "lemons problem" by providing buyers with assurance and protection against purchasing a defective vehicle. This reduces the information asymmetry between buyers and sellers, as the seller is now taking on the risk rather than the buyer. It also provides an incentive for sellers to ensure they are selling a reliable vehicle, as they will be held accountable if the car breaks down soon after purchase.

One Way the "Lemons Problem" in the Used-Car Market Can