Imagine a market for used computers. There are two types of computers: good and bad. Also imagine that there are 50% of each on the market. Buyers can imagine paying 5,000 for a good computer and 1,000 for a bad computer Sellers want at least 4000 for a good computer and 1500 for a bad computer -What would happen over time in the market when buyers can observe the quality of computers through transactions?

Principles of Economics 2e
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ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
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Chapter16: Information, Risk, And Insurance
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Imagine a market for used computers. There are two types of computers: good and bad. Also imagine that there are 50% of each on the market.

Buyers can imagine paying 5,000 for a good computer and 1,000 for a bad computer

Sellers want at least 4000 for a good computer and 1500 for a bad computer

-What would happen over time in the market when buyers can observe the quality of computers through transactions?

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