Question

Jessica lists her faulty treadmill for sale on craigslist but does not disclose the problems with it. If Blake buys the treadmill believing that it's problem-free, this is an example of market failure due to:

A. the existence of external costs
B. the existence of public goods
C. the lack of competition
D. asymmetric information

Answer 1

Answer:

D. asymmetric information

Explanation:

Asymmetric information is when parties in a transaction do not have equal information.

In this transaction, Jessica has more information than blake. She knows the machine is faulty while Blake doesn't.

I hope my answer helps you