One Consequence of the Asymmetric-Information Problem in the Used Car

question 219

Multiple Choice

One consequence of the asymmetric-information problem in the used car market, if left unresolved, is the higher probability of

• A) new cars declining in quality because of competition from used cars.
• B) a declining quality of used cars for sale in the market.
• C) a rising quality of used cars for sale in the market.
• D) used-car buyers willing to pay higher prices in the market.

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Definitions:

Mathematical Intelligence

An individual's capacity to understand, apply, and solve mathematical concepts, operations, and problems.

Internal Attribution

The process of ascribing the cause of behavior to personal aspects such as traits, feelings, or abilities.

Ease of Retrieval Effect

A phenomenon where individuals judge an event or concept as more frequent or influential if they can easily recall examples of it.

Working Memory Capacity

The amount of information that an individual can hold and manipulate in their mind at one time for short periods.