Assuming That Information Is Asymmetric in the Used Car Market

question 67

Multiple Choice

Assuming that information is asymmetric in the used car market where both lemons and plums are sold, the equilibrium price for plums will be _____ what it is in a market with symmetric information.

• A) lower than
• B) higher than
• C) equal to
• D) 50% less than

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Definitions:

Caffeine

A stimulant found in various plants, commonly used to increase alertness and reduce sleepiness.

Dairy Products

Foods produced from the milk of mammals, such as cheese, yogurt, and butter.

Spicy Foods

Food items that contain strong spices and herbs which produce a hot or burning sensation in the mouth.

Isoflavones

A class of phytoestrogens, plant-derived compounds with estrogenic activity, commonly found in soy products.