Suppose that there is asymmetric information in the market for used cars

Buyer's willingness to pay can be calculated as follows:

Buyers know that there is a 30% chance of getting a lemon and 70% chance of a high quality car.

The worth of high quality used car is $30,000.

The worth of a low quality used car is $15,000

Willingness (W) to pay for a used car,

W=30100×15000+70100×30000W=4500+21000W=25500W=30100×15000+70100×30000W=4500+21000W=25500

Therefore, the value that a buyer is willing to pay is $25,500.

There are many ways that can help to overcome asymmetric information namely, guarantees and warranties, availability of information, taxes and subsidies, monitoring and controlling and industrial standards.

The availability of information would best solve the asymmetric information in this market as a consumer would then be able to differentiate between a low and high quality used car and this will help to promote better customer satisfaction.