In the Used Car Market with Warranties,the Equilibrium Is a ________

question 46

Multiple Choice

In the used car market with warranties,the equilibrium is a ________ and there is ________.

• A) pooling equilibrium; inefficiency, partly because of oversupply of good cars
• B) pooling equilibrium; inefficiency, partly because of oversupply of lemons (poor quality used cars)
• C) separating equilibrium; no inefficiency
• D) separating equilibrium; inefficiency, partly because of oversupply of lemons (poor quality used cars)
• E) pooling equilibrium; no inefficiency

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