Question

What do economists (and used-car dealers) mean by a “lemon”?

Short answer

Economists refer to the lowest-quality products on the market as "lemons."

Step-by-step solution

Definition of economist.

A professional and practitioner in the social science discipline of economics are known as an economist.In addition, the person can research, develop, and apply financial theoretical concepts, as well as publish about economic policy

Explanation of solution.

To begin with, economists must understand that if data is poor, the pricing will reflect it. However, just a few dealers have a strong reputation in the market, and their used car costs are accordingly high. Short-term gains from selling a consumer a "Lemon" can result in long-term losses owing to a loss of reputation. Cheaper used automobiles available from the dealer, on the other hand, will cause the consumer to pay less for those cars, lowering the price. As a result, the quality will suffer as a result of this, in order to make a profit.

As a result, 'lemons' are the lowest-quality products available at the lowest costs on the market.