Assume That Both High and Low Quality Appliances Are Sold

question 118

Multiple Choice

Assume that both high and low quality appliances are sold in the used appliance market. If we assume asymmetric information with sellers having more information regarding quality than buyers, which of the following is necessarily true? The

• A) fraction of high quality appliances will be greater than under perfect knowledge.
• B) fractions of high and low quality appliances will be the same as with perfect information.
• C) fraction of high quality appliances will be less than with perfect information.
• D) none of the above

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Definitions:

Mammogram

An X-ray imaging method specifically used for breast examination to detect and diagnose breast cancer.

American Cancer Society

A nationwide voluntary health organization dedicated to eliminating cancer as a major health problem.

Latina

Refers to a woman or girl of Latin American origin or descent.

Proportion

The ratio or fraction that represents the part of the whole or a percentage of the total.