What condition does NOT need to be present for adverse selection to be a problem?
A)There is variation in quality of the products in the market.
B)Buyers who are unsure of quality will pay a low price for the product.
C)Consumers have a hard time assessing quality prior to purchase.
D)Sellers who are unsure of quality will sell the product at a low price.

Question

Quizplus · Accepted Answer

Adverse selection refers to the scenario in which buyers have a hard time distinguishing between high- and low-quality products, and sellers with low-quality products are more likely to offer them for sale. The condition that does not need to be present for adverse selection to be a problem is option D, where sellers who are unsure of quality will sell the product at a low price. This option is contradictory because if sellers are unsure of the quality of their product, they may not necessarily sell it at a low price. Therefore, option D is the correct answer.

What Condition Does NOT Need to Be Present for Adverse