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Author Question: In the market for used motorcycles there are high-quality motorcycles and low-quality motorcycles. ... (Read 107 times)

futuristic

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on: Apr 19, 2019

Question 1

If a buyer or seller enters into an exchange with another party who has more information, there is


◦ symmetric information and moral hazard.
◦ asymmetric information and adverse selection.
◦ a negative externality imposed.
◦ a free-rider problem.

Question 2

In the market for used motorcycles there are high-quality motorcycles and low-quality motorcycles. Potential buyers cannot determine prior to purchase whether the motorcycle is high quality or low quality. Which of the following statements best describes what is likely to happen in this market?


◦ The price of a used motorcycle will be very close to the value of a high-quality motorcycle, which will encourage people to sell high-quality motorcycles.
◦ The price of a used motorcycle will be between the value of a high-quality and low-quality motorcycle. This will encourage people to withdraw high-quality motorcycles from the market.
◦ This is an example of adverse selection, as the buyer will have more information about the quality of the used motorcycle than the seller will.
◦ Over time the price of a used motorcycle will increase in this market, as there is more of an incentive for owners of high-quality motorcycles to sell than owners of low-quality motorcycles.
Principles of Economics ¦ Case, Fair, Oster ¦ 12th Edition
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Marked as best answer by futuristic on Apr 19, 2019

zacnyjessica

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Reply #1 on: Apr 19, 2019
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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futuristic

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Reply #2 on: Apr 19, 2019
Thank you!


zacnyjessica

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Reply #3 on: Apr 19, 2019
Always glad to help...


Sydney Wheeler

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Reply #4 on: Nov 13, 2022
thank you


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