Which of the Following Is a Possible Market Solution to the Lemons

question 305

Multiple Choice

Which of the following is a possible market solution to the lemons problem?

• A) Producers might offer product guarantees and warranties.
• B) Producers might be required to meet certain legal standards to obtain licenses granting the right to sell their products.
• C) Government agencies might be charged with directly overseeing production and distribution of certain products.
• D) Liability laws might be established to ensure that firms selling certain products must face penalties in the event the products function poorly.

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Definitions:

Arbitration Agreement

A contract in which parties agree to resolve disputes through arbitration instead of through the court system.

Customer Data

Information collected by businesses about their customers, which may include contact information, buying preferences, and history.

Security Breach

An incident that results in unauthorized access or exposure of private information, potentially leading to identity theft or data loss.

Executed Contract

A contract that has been fully completed, meaning all terms and conditions have been met by the parties involved.