Question

A potential buyer of a week-old car might believe that a person who returns a car after only one week could have discovered it was a lemon and may be trying to get rid of it. Alternatively, the seller could have simply changed his or her mind about the car. The fundamental problem described here is what we refer to in economics as __________.

Answer 1

Answer: Asymmetric information

Step-by-step explanation:

Asymmetric information is basically refers to the economical transaction of knowledge or some material between the two parties.

In the asymmetric information, the knowledge between the two parties are unequal as one party contain better data or information as compared to the other party. Asymmetric information is also called as information failure and it also create imbalance in the transaction.

Therefore, The fundamental problem in the above given situation basically describe about the symmetric information.