In a "lemons" market:

Question

Quizplus · Accepted Answer

In a lemons market, there is asymmetric information between the buyer and seller, meaning the seller has more information about the quality of the product than the buyer. This leads to the sale of low-quality goods, or "lemons," at the same price as high-quality goods, causing a decrease in overall quality in the market. Regulators may intervene to try to control quality, but in general, different quality goods do not sell at different prices in a lemons market. Therefore, option D - asymmetric information leading to the sale of low-quality goods - is the best choice.

In a "Lemons" Market