If Buyers Cannot Assess the Quality of Used Cars but There

question 39

Multiple Choice

If buyers cannot assess the quality of used cars but there are warranties for cars

• A) too few lemons are sold.
• B) too many good used cars are sold.
• C) good used cars are sold at a higher price than lemons.
• D) there is an adverse selection problem.

---

Definitions:

Drive Axle Configurations

Drive axle configurations refer to the arrangement of the axles and wheels in a vehicle which affects its drive capabilities, such as 4x2, 6x4, etc.

Gearsets

Collections of gears working together to transmit power and change speed or direction in mechanical systems.

Double-reduction Axle

An axle configuration in heavy-duty vehicles where two sets of reduction gears are used for greater torque and lower rotational speed.

Differential Carrier

The component within the differential housing that holds the differential gears, allowing for speed variation between a vehicle’s drive wheels.