The adverse selection of sellers is the
A)tendency for buyers to choose to buy from sellers who are not trustworthy even when product quality is high.
B)tendency for the mix of goods to be skewed toward more low-quality goods when buyers can't observe quality.
C)skew in markets when sellers cannot observe quality that leads to lower prices.
D)skew in markets toward buyers who pay less when sellers cannot tell a buyer's willingness to pay.

Question

Quizplus · Accepted Answer

Adverse selection refers to the phenomenon where the mix of goods produced or sold in a market is skewed towards lower quality when buyers cannot observe quality. This happens because sellers of high-quality goods may be unwilling to sell at a lower price due to the lack of differentiation between their product and lower-quality products. As a result, buyers may end up paying for lower-quality goods even though they are willing to pay more for higher quality.

The Adverse Selection of Sellers Is the