Suppose That in a Market for Used Cars, There Are

question 170

Multiple Choice

Suppose that in a market for used cars, there are good used cars and bad used cars (lemons) .Consumers are willing to pay as much as $6,000 for a good used car but only $1,000 for a lemon.Sellers of good used cars value their cars at $5,000 each and sellers of lemons value their cars at $800 each.Buyers cannot tell if a used car is reliable or is a lemon.Based on this information, what is the likely outcome in the market for used cars?

• A)Sellers of good used cars will drop out of the market.
• B)Sellers of good used cars will incur losses.
• C)Sellers of lemons will drop out of the market.
• D)Used cars will sell for $3,000.

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Definitions:

Association Cortex

Areas of the cerebral cortex that integrate information from various parts of the brain to perform complex cognitive tasks.

Stimulation Probe

A stimulation probe is a device or instrument used to apply electrical or other forms of stimulation to biological tissues, often for research or therapeutic purposes.

Swirls

Patterns or shapes characterized by spirals or circular twists.

Frontal Lobes

The part of the cerebral cortex involved in reasoning, motor control, emotion, and language.