The "Lemons" Model Suggests That in Cases of Asymmetric Information

question 34

Multiple Choice

The "lemons" model suggests that in cases of asymmetric information between buyers and sellers:

• A)low-quality goods become the preferred choice.
• B)consumers are indifferent between the purchase of high- and low-quality goods.
• C)the proportion of low quality goods in the market increases.
• D)the availability of high quality goods in the market increases.

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Definitions:

Unilateral Mistake

An error made by one party in a contract that does not necessarily void the contract unless the other party was aware and took advantage of the mistake.

Undue Influence

A situation where an individual is able to influence another person's decisions due to a relationship of trust, leading to unfair outcomes.

Independent Advice

Professional advice offered by a party with no vested interest in the outcome, ensuring unbiased and impartial guidance.

Intent To Deceive

The deliberate intention to mislead or deceive someone, typically to gain a legal or financial advantage.