- In a market for used cars, there are "lemons" and "plums". The propor- tion of lemons in this market is L, and the proportion of plums is 1 – L. The seller is willing to sell a lemon for $2,000, and a plum for $4,000. The buyer is willing to pay $2,500 for a lemon, and $5,000 for a plum. What is the maximum proportion of lemons, Î, in this market for plums to continue to be sold? Explain.

- In a market for used cars, there are "lemons" and "plums". The propor- tion of lemons in this market is L, and the proportion of plums is 1 – L. The seller is willing to sell a lemon for $2,000, and a plum for $4,000. The buyer is willing to pay $2,500 for a lemon, and $5,000 for a plum. What is the maximum proportion of lemons, Î, in this market for plums to continue to be sold? Explain.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter16: Information, Risk, And Insurance

Section: Chapter Questions

Problem 20CTQ: A website offers a place for people to buy and sell emeralds, but information about emeralds can be...

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