Bill sees a classified ad offering aused DVD player for $5. On the opposite page

Question

Bill sees a classified ad offering aused DVD player for $5. On the opposite page, he sees a big colorad from a national electronics chain offering new DVD players for$50. Bill values a DVD player at $75 as long as it works,regardless of whether it is new or used. Bill sees a classified ad offering aused DVD player for $5. On the opposite page, he sees a big colorad from a national electronics chain offering new DVD players for$50. Bill values a DVD player at $75 as long as it works,regardless of whether it is new or used. 9.4. Al is unable to sell Bill the DVDplayer because: I. Adverse selection can cause buyers not to buy high-quality goodsbecause of uncertainty about their quality. II. Moral hazard can prevent sellers from offering guarantees ofquality, because sellers can^'t be sure that buyers won^'t try totake advantage of the guarantee by filing false claims. A. I only B. II only C. Both I and II

Explanation / Answer

Answer: C

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