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Tidy Tidy
wrote...
Posts: 9704
4 years ago
Suppose that in a market for used cars, there are good used cars and bad used cars (lemons). Consumers are willing to pay as much as $9,000 for a good used car but only $3,000 for a lemon. Sellers of good used cars value their cars at $7,500 each and sellers of lemons value their cars at $1,500 each. Buyers cannot tell if a used car is reliable or is a lemon. Based on this information, what is the likely outcome in the market for used cars?
A) Sellers of good used cars will drop out of the market.
B) Sellers of good used cars will incur losses.
C) Sellers of lemons will drop out of the market.
D) Used cars will sell for $6,000.
Textbook 

Essentials of Economics


Edition: 4th
Authors:
Read 545 times
3 Replies
Repeat after me: 'Calm down. Things are gonna be fine. Things are gonna be all great. Just relax.' Wink Face
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SydnieSydnie
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Posts: 6060
4 years ago
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wrote...
4 years ago
Excellent answer, thank you.
Repeat after me: 'Calm down. Things are gonna be fine. Things are gonna be all great. Just relax.' Wink Face
wrote...
4 years ago
I was confident with my answer, glad it was correct.

Oh, and thumbs-up are more than welcome Slight Smile
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