Consider a Market in Which High-Quality and Low-Quality Television Sets

question 4

Multiple Choice

Consider a market in which high-quality and low-quality television sets are sold. Before consumers make a purchase, they do not know the quality of the sets, but the sellers do know. As compared to a situation where both consumers and sellers know the quality of the sets, this situation would:

• A) cause no change in the ratio of low to high-quality sets sold.
• B) increase the fraction of high-quality sets sold.
• C) increase the fraction of low-quality sets sold.
• D) cause the average price of goods sold to rise.

---

Definitions:

Nephridia

Excretory organs in many invertebrates, such as annelids, functioning similarly to kidneys in vertebrates by removing waste materials.

Flatworms

A group of invertebrates belonging to the phylum Platyhelminthes, known for their flat bodies and absence of body cavity.

Malpighian Tubules

Excretory structures found in some arthropods, including insects and spiders, that remove waste products from the blood and excrete them into the digestive tract.

Nephridia

Excretory organs in many invertebrates, functioning in the elimination of metabolic wastes.