Question

Scenario: The market for used cell phones is very popular in Barylia. However, several phones available in this market are of inferior quality and it is often impossible to differentiate between a good-quality phone and a poor-quality phone. Refer to the scenario above. Based on the given information, we can conclude that the market for used cell phones in Barylia: is perfectly competitive. has only one seller. is monopolistically competitive. has asymmetric information.

Answer 1

D: has asymmetric information.

Explanation:

Several phones available in Barylia market are of inferior quality and it is often impossible to differentiate between a good-quality phone and a poor-quality phone.

So, we can conclude that the market for used cell phones in Barylia: has asymmetric information.

Asymmetric information or often called information failure shows the decision in transactions where one market or party has got better information than the others.