The lemons problem occurs mainly because of

Question

Quizplus · Accepted Answer

The lemons problem is a classic example of asymmetric information, which occurs when one party has more information than the other party in a transaction. In the case of the lemons problem, the seller of a used car knows more about the car's condition than the potential buyer, which can lead to the sale of low-quality cars (lemons) at a higher price than they are worth. This creates market failure because it leads to a misallocation of resources and a loss of economic efficiency.

The Lemons Problem Occurs Mainly Because of