When buyers cannot assess the quality of a product before buying, owners of _____ units are more likely to choose to sell their units, and owners of _____ units are less likely to choose to sell their units.
A)moderate-quality; low-quality
B)high-quality; moderate-quality
C)high-quality; low-quality
D)low-quality; high-quality

Question

Quizplus · Accepted Answer

This scenario describes the "lemons problem," where sellers of low-quality goods (lemons) are more likely to sell because buyers cannot differentiate between high and low-quality products. High-quality product owners are less likely to sell because they cannot get a fair price.

When Buyers Cannot Assess the Quality of a Product Before