試題詳解

11. In the market for used motorcycles there are high- and low-quality motorcycles. Potential buyers cannot determine prior to purchase whether a motorcycle is high- or low-quality. The following statement that best describes what is likely to happen in this market is:
(A) 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.
(B) The price of a used motorcycle will be between the buyer and seller values for low-quality motorcycles. This will encourage people to withdraw high-quality motorcycles from the market.
(C) 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.
(D) Over time the market price of a used motorcycle will increase, as there is more of an incentive for owners of high-quality motorcycles to sell than owners of low-quality motorcycles.