Suppose That in a Market for Used Cars,there Are Good

question 46

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 $9,000 for a good used car but only $3,000 for a lemon.Sellers of good used cars value their cars at $7,500 each and sellers of lemons value their cars at $1,500 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 $6,000.

---

Definitions:

Producers

Organisms, mainly plants and algae, that can produce their own food through the process of photosynthesis, serving as the base of the food chain.

Reproduction

The process in biology where offspring are generated from their progenitors.

Generation

A group of individuals born and living around the same time, typically considered to be about 20–30 years.

Development

The process through which an organism grows or progresses, often involving physical, psychological, or social changes.