Answer:
The correct option is (D)
Explanation:
Asymmetric information happens when one party to a contract or transaction is fully aware about the material facts of the product that he intends to sell. However, the other party is not aware about certain facts about the product. This is a case of asymmetric information.
A disadvantage of asymmetric information is that it could have fraudulent consequences like adverse selection. In this case, Jessica (seller) knew about the defects of the product but chose not to disclose the same and Blake makes an adverse selection without knowing the defects of the product.
This is an example of market failure due to asymmetric information.
