Question

Predictions using the supply-and- demand model for used cars are likely not reliable because consumers know less than suppliers about used car quality not reliable because it is difficult to find buyers and sellers of used cars reliable because the used car market is competitive reliable because used cars have many buyers reliable because used cars have few sellers

Answer 1

Answer:

The answer is: Not reliable because consumers know less than suppliers about used car quality.

Explanation:

Predictions using the supply and demand (S&D) model are reliable when:

• companies sell identical products,
• everyone involved (suppliers and consumers) has full knowledge
• about the price and quality of the products or services being offered,
• both the suppliers and consumers are price takers (have no control to dictate prices), and
• the costs of trading are low

If one or more of these conditions are not met, then the S&D model wouldn´t work properly. In this specific case, the suppliers had much information about the quality of the used cars than their customers.