Please answer fast 22.There are two types of used cars, high quality and low quality. Buyers cannot distinguish thetwo 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 valuea high-quality used car at $3,466 and a low-quality used car at $1,200. Suppose that 30% of used carsare of high quality and 70% of used cars are of low quality. In equilibrium,а.all used cars will be sold.b.only low-quality used cars will be sold.с.no used cars will be sold.d.only high-quality used cars will be sold.е.high-quality used cars will sell for a uniformly higher price than low-quality used cars.ANS: Cwhy is c

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Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Frontiers Of Microeconomics

Section: Chapter Questions

Problem 4PA

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22.
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 $3,466 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,
а.
all used cars will be sold.
b.
only low-quality used cars will be sold.
с.
no used cars will be sold.
d.
only high-quality used cars will be sold.
е.
high-quality used cars will sell for a uniformly higher price than low-quality used cars.
ANS: C
why is c

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