$\begin{array}{cccc}
\hline \text { Markets } & \begin{array}{l}
\text { Plums high quality) }
\end{array} & \begin{array}{l}
\text { Lemons low quality) } \
\text { Supplied }
\end{array} & \begin{array}{c}
\text { \% Buyers Believe are } \
\text { Lemons low quality) }
\end{array} \
\hline 1 & 2 & 20 & 80 \% \
2 & 4 & 16 & 80 \% \
3 & 6 & 12 & 50 \%\
\hline
\end{array}$ Table 9.4
-In Table 9.4, market 1 would be in equilibrium if buyers believed lemons accounted for:
A)about 90.91% of the market.
B)about 74.5% of the market.
C)about 63.25% of the market.
D)about 57.65% of the market.

Question

$\begin{array}{cccc}
\hline \text { Markets } & \begin{array}{l}
\text { Plums high quality) }
\end{array} & \begin{array}{l}
\text { Lemons low quality) } \
\text { Supplied }
\end{array} & \begin{array}{c}
\text { \% Buyers Believe are } \
\text { Lemons low quality) }
\end{array} \
\hline 1 & 2 & 20 & 80 \% \
2 & 4 & 16 & 80 \% \
3 & 6 & 12 & 50 \%\
\hline  
\end{array}$  Table 9.4
-In Table 9.4, market 1 would be in equilibrium if buyers believed lemons accounted for:
A)about 90.91% of the market.
B)about 74.5% of the market.
C)about 63.25% of the market.
D)about 57.65% of the market.

Quizplus · Accepted Answer

The equilibrium percentage of lemons is calculated as the ratio of lemons to the total number of cars (lemons + plums). In market 1, there are 20 lemons and 2 plums, so the percentage of lemons is $ \frac{20}{20+2} \times 100\% = 90.91\% $.

Table 94 -In Table 9

Table 94
-In Table 9