If All Used Cars in a Market with Symmetric Information

question 78

Multiple Choice

If all used cars in a market with symmetric information about quality are sold at the same price, then

• A)sellers of good quality cars are subsidizing sellers of lemons.
• B)buyers of good quality cars are subsidizing buyers of lemons.
• C)sellers of lemons are subsidizing sellers of good quality cars.
• D)sellers of good quality cars are subsidizing buyers of lemons.

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Definitions:

Miscommunications

Failures or errors in conveying or understanding messages accurately between parties.

Systematic Identification

The methodical process of recognizing and categorizing entities based on established criteria.

Self-Evident Meaning

Something that is clearly or obviously understood without the need for explanation or justification.

Comprehend Two Languages

The ability to understand and process information in two different languages.