Question

Which of the following is a possible market solution to the lemons problem? Producers might be required to meet certain legal standards to obtain licenses granting the right to sell their products. Government agencies might be charged with directly overseeing production and distribution of certain products. Liability laws might be established to ensure that firms selling certain products must face penalties in the event the products function poorly. Producers might offer product guarantees and warranties.

Answer 1

Producers might offer product guarantees and warranties

Step-by-step explanation:

In business, lemon problems refers to the problems that might occur during transaction that is caused by different information possessed by the sellers and the buyers

For example,

Let's say that Person A offered to sell 10 lemons for $1. Person B is interested to purchase it since average price for 10 lemons is $2. Person B believed that the transaction is worth it.

But, Person A knows that the Lemons sold is in bad condition before he even sell it. Person B doesn't know this, so when he receive the lemon, the value of the product become lower than he expected.

Offering guarantees can solve this problem. The buyers can obtain their money back if the condition of the product is not as promised by the sellers.