Suppose that there are only two types of used cars,peaches and lemons.Peaches are worth $10,000,and lemons are worth $6,000.Three fourths of all used cars are peaches,and one fourth are lemons.In a market with no signals,for instance,a market without warranties,the average value of cars actually sold will be
A) $6,000.
B) $7,000.
C) $7,500.
D) $9,000.
E) $10,000.
Correct Answer:
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Q1: In the used car market with no
Q2: The used car market without warranties suffers
Q4: Of the following,the best example of private
Q5: Used car buyers believe a car is
Q6: Warranties in the used car market _
Q7: Suppose there are only two kinds of
Q8: Adverse selection is created by
A) incentives to
Q9: In the used car market,adverse selection is
Q10: Suppose that there are only two types
Q11: Signals are believable when the cost of
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