The practice of potential buyers offering lower prices for a product of uncertain quality than they would for a product of certain quality is known as:

Question

The practice of potential buyers offering lower prices for a product of uncertain quality than they would for a product of certain quality is known as:​

Quizplus · Accepted Answer

The lemon problem, introduced by economist George Akerlof in his 1970 paper "The Market for Lemons," describes a market phenomenon where the presence of goods of uncertain quality (like a used car with hidden defects, or "lemons") leads to a decline in the average quality of goods and a decrease in market efficiency. Buyers, aware of their inability to distinguish good quality items from "lemons," are willing to offer only a lower price for all items, regardless of their actual quality.

The Practice of Potential Buyers Offering Lower Prices for a Product