Purchase Solution

Difficulties traders face in markets that involve "Lemons"

Not what you're looking for?

Ask Custom Question

Question(1)
Briefly describe the methods traders use in attempting to evade the difficulties they face in markets that involve "Lemons"?

Purchase this Solution

Solution Summary

The expert explains the concepts of markets for Lemons and how traders can take care of the difficulties offered by the market for lemons.

Solution Preview

a) Briefly describe the methods traders use in attempting to evade the difficulties they face in markets that involve "Lemons"?

The characteristics of a lemon market are:
1. Asymmetry of information: No buyers can accurately assess the value of a product through examination before sale is made whereas all the sellers can directly assess the value of a product prior to sale
2. There is an incentive for the seller to sell a low quality product as a higher quality one
3. There are no signaling technology or means to disclose what they hold. i.e. sellers with a Peach car have no way to credibly disclose this to buyers and distinguish themselves from ...

Purchase this Solution


Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.