Asked by Kanidra Stringer on Jul 03, 2024
Verified
Private information leads _____ to expect hidden problems in items offered for sale,leading to _____ prices and to the best items being kept off the market.
A) buyers;high
B) buyers;low
C) sellers;high
D) sellers;low
Private Information
Information that is not publicly available and may give an individual or business a competitive advantage.
Hidden Problems
Issues or complications within a system or product that are not immediately obvious or visible.
Buyers
Individuals or organizations that purchase goods or services for personal use, resale, or production.
- Acquire knowledge on the concept of adverse selection and its repercussions for the marketplace.
- Understand the impact of uneven information distribution on economic exchanges.
Verified Answer
ZK
Zybrea KnightJul 04, 2024
Final Answer :
B
Explanation :
This concept is known as adverse selection, where buyers suspect that items for sale might have hidden defects, leading them to offer lower prices. This phenomenon can result in a market where high-quality goods are less likely to be offered, as sellers are not willing to accept the lower prices that buyers are willing to pay due to their concerns about potential hidden problems.
Learning Objectives
- Acquire knowledge on the concept of adverse selection and its repercussions for the marketplace.
- Understand the impact of uneven information distribution on economic exchanges.
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