When a market is subject to severe adverse selection due to seller private information
A)the market skews toward higher quality.
B)the market skews toward higher prices.
C)all suppliers end up selling low-quality products.
D)buyers have more information than sellers.

Question

Quizplus · Accepted Answer

Adverse selection due to seller private information typically leads to a market where low-quality products dominate. This is because buyers, unable to distinguish between high and low-quality products due to lack of information, are not willing to pay premium prices, driving out higher-quality products.

When a Market Is Subject to Severe Adverse Selection Due