6. There are two types of used cars, high quality and low quality. Buyers cannot distinguish the two types until after they have purchased them. Owners of high-quality cars will sell them if the price is $2,000 or higher. Owners of low-quality cars will sell them if the price is $1,000 or higher. Buyers value a high-quality used car at $4,266 and a low-quality used car at $1,200. Suppose that 30% of used cars are of high quality and 70% of used cars are of low quality. In equilibrium, will be sold. a. only high-quality used cars b. only low-quality used cars c. all used cars d. no used cars e. None of the above.

6. There are two types of used cars, high quality and low quality. Buyers cannot distinguish the two types until after they have purchased them. Owners of high-quality cars will sell them if the price is $2,000 or higher. Owners of low-quality cars will sell them if the price is $1,000 or higher. Buyers value a high-quality used car at $4,266 and a low-quality used car at $1,200. Suppose that 30% of used cars are of high quality and 70% of used cars are of low quality. In equilibrium, will be sold. a. only high-quality used cars b. only low-quality used cars c. all used cars d. no used cars e. None of the above.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 10PAE

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