If low-quality goods are not allowed to be sold, then the problem of adverse selection due to seller's having private information will
A)grow.
B)not be affected.
C)lessen slightly.
D)disappear.

Question

Quizplus · Accepted Answer

When low-quality goods are not allowed to be sold, the problem of adverse selection diminishes because buyers can be more confident that the goods they are purchasing meet a certain standard of quality, reducing the risk associated with asymmetric information.

If Low-Quality Goods Are Not Allowed to Be Sold, Then