Suppose that everyone in the used-car example in the text is risk neutral, potential car buyers value
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Suppose that everyone in the used-car example in the text is risk neutral, potential car buyers value lemons at $2,000 and good used cars at $10,000, the reservation price of lemon owners is $1,500, and the reservation price of owners of high-quality used cars is $8,000. The share of current owners who have lemons is θ. For what values of do all the potential sellers sell their used cars? Describe the equilibrium
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Microeconomics Theory and Applications with Calculus
ISBN: 978-0133019933
3rd edition
Authors: Jeffrey M. Perloff
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