Econ 201 Lecture 23 Information and Search Example 23

Good cars "Lemons" The owner of a used car knows whether it is a lemon but prospective buyers cannot tell. Example 23.9. Suppose 10% of all new cars produced are lemons. Good used cars are worth $10,000 to their owners and lemons are worth only $6000. If the used cars for sale had the same quality distribution as new cars (i.e., 90% good, 10% ................
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