The "Lemons Problem" Is Overcome in the Used Car Market

question 67

Multiple Choice

The "lemons problem" is overcome in the used car market by

• A)strict government regulation of private deals between individual buyers and sellers of used cars.
• B)most used cars selling for well below their true values.
• C)"lemon insurance" policies being offered by insurance companies.
• D)the existence of used car dealers who are concerned about maintaining their reputations.

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Definitions:

Information Filtering

The process of screening, selecting, and presenting information in a way that selectively reduces the volume of information available.

Arbitration

A method of dispute resolution involving a neutral third party who makes a binding decision.

Neutral

Having no strongly positive or negative qualities, characteristics, or feelings; characterized by impartiality or absence of bias.

Communication

The process of sharing information, ideas, thoughts, and messages with others through spoken words, writing, or other mediums.