Buyers of used cars can reduce adverse selection in all of the following ways EXCEPT:
A) offering a price equal to the value of a low-quality used car.
B) having a mechanic look over the used car.
C) requesting a warranty.
D) requesting a "CARFAX" report.

Question

Quizplus · Accepted Answer

Offering a price equal to the value of a low-quality used car does not reduce adverse selection. It may even attract sellers of low-quality cars to sell at that price, resulting in adverse selection. The other three options, having a mechanic inspect the car, requesting a warranty, and obtaining a CARFAX report, can reduce adverse selection by providing more information about the car's condition and history.

Buyers of Used Cars Can Reduce Adverse Selection in All