The Lemons Problem May Cause Markets with Asymmetric Information

question 53

Multiple Choice

The lemons problem may cause markets with asymmetric information

• A) to reduce the number of low-quality goods.
• B) to reduce the number of high-quality goods.
• C) to increase the number of high-quality goods.
• D) to increase the average quality of goods.

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Definitions:

Water Scarcity

Water scarcity is a situation in which the available water supply is insufficient to meet the demands of water use within a region.

Runoff

The portion of rainfall, melted snow, or irrigation water that flows across the ground's surface and is not absorbed into the soil, often reaching rivers, lakes, and oceans.

Increasing Numbers

A term indicating a situation where the quantity or amount of a certain entity is growing over time.

Three Gorges

A region along the Yangtze River in China known for the Three Gorges Dam, the world's largest hydroelectric power station by total capacity.