demonstrate the quality of their goods to buyers—and since buyers cannot determine which goods have higher

quality, they are likely to be unwilling to pay a higher price for such goods.

Economists sometimes refer to a market with few buyers and few sellers as a thin market. By contrast, they call

a market with many buyers and sellers a thick market. When imperfect information is severe and buyers and

sellers are discouraged from participating, markets may become extremely thin as a relatively small number

of buyer and sellers attempt to communicate enough information that they can agree on a price.

When Price Mixes with Imperfect Information about Quality

A buyer confronted with imperfect information will often believe that the price reveals something about the

product's quality. For example, a buyer may assume that a gemstone or a used car that costs more must be of

higher quality, even though the buyer is not an expert on gemstones. Think of the expensive restaurant where
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