CARFAX Is a Company That Compiles and Sells Histories of Used

question 230

Multiple Choice

CARFAX is a company that compiles and sells histories of used cars. CARFAX reduces the

• A) number of cars exchanged in the used car market.
• B) information asymmetry in the used car market.
• C) number of used cars offered for sale in the market.
• D) cost of used cars in the market.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded.

Equilibrium Price

The price at which the quantity of a product offered is equal to the quantity of the product in demand, thus the market is in balance.

Compact Discs

Optical storage media used to store data, including music and software, readable by laser-based players and computers.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a certain period of time.