In Rustbucket, Michigan, There Are 200 Used Cars for Sale

question 10

Multiple Choice

In Rustbucket, Michigan, there are 200 used cars for sale, half of them are good and half of them are lemons.Owners of lemons are willing to sell them for $300.Owners of good used cars are willing to sell them for prices above $1,300 but will keep them if the price is lower than $1,300.There is a large number of potential buyers who are willing to pay $600 for a lemon and $2,100 for a good car.Buyers can't tell good cars from bad, but original owners know.

• A)There will be an equilibrium in which all used cars sell for $800.
• B)There will be an equilibrium in which lemons sell for $300 and good used cars sell for $1,300.
• C)There will be an equilibrium in which all used cars sell for $1,350.
• D)The only equilibrium is one in which all used cars on the market are lemons and they sell for $600.
• E)There will be an equilibrium in which lemons sell for $600 and good used cars sell for $2,100.

---

Definitions:

Semantics

The study of meaning in language, including the analysis of the significance of words, phrases, sentences, and symbols.

Pragmatics

Pragmatics is a subfield of linguistics concerned with how context influences the interpretation of meaning in language use.

Behaviourist Theory

A theory in psychology that focuses on observable behaviors and the ways they're learned, rather than internal states like thoughts or feelings.

Nativist Theory

The theory that human traits, especially language, are innate and coded into one's genetics.