Table 9.3
-In Table 9.3, Market 3 would be in equilibrium if buyers believed lemons account for
A) 45% of the market.
B) 50% of the market.
C) 55% of the market.
D) 60% of the market.

Question

Table 9.3
-In Table 9.3, Market 3 would be in equilibrium if buyers believed lemons account for
A) 45% of the market. 
B) 50% of the market. 
C) 55% of the market. 
D) 60% of the market.

Quizplus · Accepted Answer

Market equilibrium in the context of markets for lemons (a term used in economics to describe a market where buyers and sellers have asymmetric information about the quality of products, leading to adverse selection) is achieved when the proportion of lemons (inferior quality products) in the market matches buyers' expectations. Without the specific details from Table 9.3, the correct answer relies on general principles of market equilibrium in the presence of asymmetric information. Typically, a 50% expectation might represent a balanced view from buyers about the market composition, potentially leading to an equilibrium. However, without the table, this explanation assumes a standard interpretation of market dynamics involving lemons.

Table 9.3 -In Table 9.3, Market 3 Would Be in Equilibrium If