You are in the market for a used moped to get around town. Used mopeds can either be good or bad. Assume half of all mopeds are good and half are bad. Good mopeds are worth $5k, and bad mopeds are worth $3k. However, because you are new to the moped scene, you cannot distinguish between good and bad mopeds. Your local moped dealer, however, is an expert and can determine the type (good or bad) of every moped. What price(s) will the dealer charge for mopeds? Justify your answer. Is there a market failure in this situation.

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The dealer will charge a single price for all mopeds lets call it p The problem is that since you ca... View the full answer