There Are Two Types of Used Cars, High Quality and Low

question 21

Multiple Choice

There are two types of used cars, high quality and low quality.Buyers cannot distinguish the two types until after they have purchased them.Owners of high-quality cars will sell them if the price is $2,000 or higher.Owners of low-quality cars will sell them if the price is $1,000 or higher.Buyers value a high-quality used car at $1,942 and a low-quality used car at $1,200.Suppose that 70% of used cars are of high quality and 30% of used cars are of low quality.In equilibrium,

• A)only low-quality used cars will be sold.
• B)only high-quality used cars will be sold.
• C)no used cars will be sold.
• D)all used cars will be sold.
• E)high-quality used cars will sell for a uniformly higher price than low-quality used cars.

---

Definitions:

Reaction Formation

A defense mechanism where unacceptable emotions or impulses are turned into their opposites to hide the true feelings.

Self-Acceptance

The recognition and acceptance of one’s own abilities, limitations, and value as a person, often regarded as a crucial component of mental health.

Self-Concept

An individual's perception and evaluation of themselves, including beliefs about one's abilities, appearance, and personality.

Unconscious Conflicts

Internal struggles that occur within the unconscious mind, often stemming from repressed desires or unmet needs, which can impact behavior and emotional well-being.