Sellers of used cars know the cars' quality, but buyers do not. Imagine that used Toyota Corollas

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Sellers of used cars know the cars' quality, but buyers do not. Imagine that used Toyota Corollas are worth $10,000 if they are of high quality and $5,000 if they are of poor quality. Although buyers may not know the quality of a specific car, they do know that 25% will be of poor quality. In such a market, what cars will be sold on the secondhand market and at what price?
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Managerial Economics Theory Applications and Cases

ISBN: 978-0393912777

8th edition

Authors: Bruce Allen, Keith Weigelt, Neil A. Doherty, Edwin Mansfield

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