Question

Owners of defective used cars have more information about the condition of their vehicles than potential buyers of those used cars. This is an example of: A. the moral hazard problem. B. a spillover cost. C. a positive externality. D. asymmetric information.

Answer 1

Answer:

D. asymmetric information.

Explanation:

Owners of defective used cars have more information about the condition of their vehicles than potential buyers of those used cars. This is an example of an asymmetric information.

An asymmetric information can be defined as a situation wherein there's an imperfect flow of information or knowledge between the buyer and the seller of a product; sellers having more knowledge than the buyer of a product.