This is a great real-world example of the Nobel Prize winning concept, The Market for Lemons. [0]
A buyer wants to spend somewhere between price 4-6, but they aren't able to tell quality 3 from quality 7. Due to fear of getting taken advantage of, they end up settling for low quality at low price. Sellers react to this behavior, and we get the price/quality distortions described above.
A buyer wants to spend somewhere between price 4-6, but they aren't able to tell quality 3 from quality 7. Due to fear of getting taken advantage of, they end up settling for low quality at low price. Sellers react to this behavior, and we get the price/quality distortions described above.
[0] http://www.economist.com/news/economics-brief/21702428-georg...