There Is an Adverse Selection Problem in the Market for Used

question 135

Multiple Choice

There is an adverse selection problem in the market for used cars because

• A) owners of poor-quality cars have a strong incentive to sell their cars, while owners of high- quality used cars have more incentive to keep their cars.
• B) owners of high-quality cars will have a strong incentive to sell their cars to obtain the higher prices, while owners of poor-quality cars will have more incentive to keep theirs.
• C) most people prefer new cars, but the high prices for new cars force most of them to buy used cars.
• D) government actions to pass "lemon" laws have reduced information on used cars.

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Definitions:

Howard Perlmutter

A scholar known for his work on the internationalization of firms, including the concept of ethnocentric, polycentric, and geocentric orientations in international business.

Degree Of Internationalization

A measure of the extent to which a company is involved in international operations, markets, and activities.

Managerial Attitude

The personal outlook or disposition a manager has towards their duties, responsibilities, and interactions with employees within an organization.

Polycentric

An approach where a business adopts local strategies in international markets, recognizing and adapting to differences.