(Solved):Provide examples of adverse selection when seller has more information about the good than the buyer does and discuss how the outcome will be different compared to a market with perfect information. View Answer…

 

Question

Provide examples of adverse selection when seller has more information about the good than the buyer does and discuss how the outcome will be different compared to a market with perfect information.

 

EXPERT ANSWER

An example where a seller has more information about the good than the buyer is used cars. The car salesman tends to know more about the history and quality of the car than a buyer since inspecting the

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