per car In the used-car market in the United Statesmillion cars are traded every

Question

per car In the used-car market in the United Statesmillion cars are traded every year at an average price of O A. 13: $8,000 O B. 50: $13,000 ??. 37; se,000 O D. 13, $26,500 OE. 37; $26,500 The market enables buyers to avoid lemons by O A. eliminating private transactions OB. creating a pooling equilibrium ° C. eiminating the supply of lemons OD. increasing the willinigness to pay for a good car and decreasing the willingness to pay for a lemon E. offering warranties and third-party inspection services The govemment O A. plays a role in the used car market with a federal "lemon law O B. plays a role in the used car market by eliminating the deadweight loss that arises when warranties are not used OC. enables buyers to avoid lemons by offering warranties OD. signals which used cars are good and which are lemons O E. is needed to make the used-car market work well Click to select your answer

Explanation / Answer

Q1. Option E is correct.

Q2. Lemons can be avoided by certification presented at the time of purchase. Otherwise sellers can offer warranties which is a proof of quality of the car. Option E

Q3. The lemon law is called The Magnuson-Moss Warranty Act where the law regulates the behaviour of sellers in used car markets by regulating the warranties offered by them to consumers in case they do meet the expectation of the buyer. Option A

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