Which of the Following Is a Possible Market Solution to the Lemons

question 305

Multiple Choice

Which of the following is a possible market solution to the lemons problem?

• A) Producers might offer product guarantees and warranties.
• B) Producers might be required to meet certain legal standards to obtain licenses granting the right to sell their products.
• C) Government agencies might be charged with directly overseeing production and distribution of certain products.
• D) Liability laws might be established to ensure that firms selling certain products must face penalties in the event the products function poorly.

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Definitions:

Ecological Footprint

A metric that quantifies the amount of nature's resources an individual, community or activity consumes relative to the Earth's capacity to regenerate those resources.

Canada

A country in North America known for its vast landscapes, multicultural diversity, and as the second-largest country in the world by area.

Netherlands

A country located in Northwestern Europe, known for its flat landscape, canals, tulip fields, windmills, and cycling routes.

Ecological Footprint

A measure of human demand on Earth's ecosystems, quantifying the amount of natural resources consumed and waste produced.