The paper describes the second-handmarket for used cars. Some cars are in good working order — these are referred to as cherries, peaches, or jewels. Some have hidden defects — these are called lemons. Yet because buyers don't know which cars are the lemons — under asymmetric information —, in an effect that is known as crowding out, the market price of even the good cars decreases. Thus, sellers of the cherries are less inclined to sell their cars, and even a competitive market will only be filled with bad cars.
The term "lemon," meaning a defective (typically used) car, entered the language of economics as a result of this paper.
Reference
Akerlof, G. (1970). The market for lemons: quality uncertainty and the market mechanism. Quarterly Journal of Economics 84 (3), 488-500.
The lemon was unknown to the ancient Romans and Greeks; it is first mentioned in the book of Nabathae[?] on agriculture in the third or fourth century.
Both lemons and limes are regularly served as lemonade[?], or as a garnish for drinks such as cola with a slice either inside or on the the rim of the glass.
Lemon juice is typically dripped onto battered fish dishes in restaurants in the United Kingdom and other countries.
A lemon is a defective car that, when purchased new or used, is found by the purchaser to have numerous or severe defects not readily apparent before the purchase.
A "lemon" is a citrus fruit with a tart or sour (not sweet) flavour.
slang; from lemon (1), perhaps via criminal slang sense of 'a person who is a loser, a simpleton', which is perhaps from the notion of someone a sharper can 'suck the juice out of'.
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