Question

the high GPA eliminates the possibility of moral hazard. Question 22 3 pts Suppose that there are only two types of used cars, peaches and lemons. Peaches are worth $10,000 and lemons are worth $4,000. Without effective signals such as warranties, the owners of peaches cannot sell their cars for $10,000 because the owners of lemons cannot convince buyers that their cars are worth more than $4,000. O buyers cannot convince owners of lemons to sell their cars for more than $4,000 O owners of peaches cannot convince buyers that their cars are worth $10,000. O buyers cannot convince owners of peaches to sell their cars for $10,000. buyers cannot convince owners of lemons to sell their cars for $4,000.

Answer 1

In this case, there are two categories with two different worth. In the absence of any effective signals, it will be difficult for owners of peaches to convince buyer that peaches worth $10000 at the time when other type is selling at less than $10000.

So,

Correct option is

Owners of peaches cannot convince buyers that there cars are worth $10000.