In the Market for Used Cars, If There Is Asymmetric

question 12

Multiple Choice

In the market for used cars, if there is asymmetric information yet all cars sell for the same price,

• A)there is an efficiency problem and there are equity implications.
• B)there is no efficiency problem, but there are equity implications.
• C)buyers of lemons win at the expense of buyers of good cars.
• D)there is no efficiency problem and there are no equity implications.

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Definitions:

Judge

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Conditions that specify the constraints or limitations within which a particular equation, problem, or theory is applicable.

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