Because of the lack of buyer's information about a perfectly functioning used car:
A) the buyer will pay less than what it's worth because of the chance that it will be a lemon.
B) sellers of perfectly functioning used cars will be more likely to enter the market.
C) the market will eventually become saturated with high quality cars.
D) All of these statements are true.

Question

Quizplus · Accepted Answer

The lack of information about the car's condition creates uncertainty for the buyer, making them less willing to pay full price for the used car. This uncertainty raises the possibility that the car could turn out to be a "lemon" and the buyer would end up with an expensive repair bill. As a result, the buyer will typically pay less than what the car is worth, creating a market where sellers may not get the full value for their perfectly functioning used cars.

Because of the Lack of Buyer's Information About a Perfectly