Why Is the Study of Asymmetric Information Associated with the Market

question 120

Multiple Choice

Why is the study of asymmetric information associated with the market for "lemons"?

• A)Sellers of citrus fruit-lemons,oranges,grapefruit-know the difference between bad fruit and good fruit; buyers do not have this information.
• B)Because there is little advertising in the market for lemons,buyers have difficulty determining the quality of lemons before they are purchased.
• C)Potential buyers of used cars have difficulty separating good used cars from bad used cars; bad used cars are often referred to as "lemons."
• D)Most sellers of used cars have less information about their cars than the dealers who buy them; used cars are often referred to as "lemons."

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Definitions:

Mace

A traditional weapon consisting of a heavy head on a shaft, used for close combat; also refers to a modern defensive spray used for personal protection.

Filipino Men

Males of Filipino descent, identified by their cultural, geographical, or national ties to the Philippines.

Police Officers

Members of law enforcement charged with the prevention and detection of crime and the maintenance of public order.

White Men

Refers to males who are identified as white, often discussed in the context of social, economic, and political advantages related to race and gender.