Consider a used car market in which half the cars are good and half are bad (lemons).If buyers are rational, the prices being offered for used cars will result in

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In a market with asymmetric information, buyers cannot distinguish between good cars and lemons, leading them to offer a price that reflects the average quality. This results in a larger proportion of lemons being sold, as sellers of good cars are less willing to sell at the lower average price.

Consider a Used Car Market in Which Half the Cars