How Do Online Auction Sites Like Ebay Attempt to Overcome

question 116

Multiple Choice

How do online auction sites like Ebay attempt to overcome the asymmetric information problems associated with goods that the buyer cannot personally inspect before purchase?

• A) The online auction firm only allows high-quality merchandise to be sold at their site.
• B) The previous performance (reputations) of the buyer and seller are posted for public review.
• C) Buyers can take receipt of any goods before they have to pay the seller.
• D) all of the above

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Definitions:

Competitive Industry

An economic sector characterized by a large number of firms that compete with each other to sell similar products or services, leading to efficiency and innovation.

Price

The cost anticipated, necessary, or paid out in return for acquiring something.

Long-Run Price

The price level at which economic forces such as supply and demand are balanced over a longer time frame, considering all inputs are variable.

Output

The amount of goods or services produced by a business, industry, or economy within a given period.