Business, 13.12.2019 05:31 sylviaswanson1

There is a market with 100 people who want to sell their used cars and 100 people who want to buy a used car. it is well known generally that half the cars are lemons and half are plums. the current owner of a car (for sale) knows its quality but none of the prospective buyers know if a given car is a lemon or a plum. the owner of a lemon is willing to accept $500 and the owner of a plum is willing to accept $1,000. the buyers of a lemon are willing to pay $600 and the buyers of a plum are willing to pay $1,200.

(i) given buyers offer a price equal to the expected quality of used cars, how many sales ("trades") will take place in the market, and of whattype of quality (i. e., lemons or plums)?
(ii) what is the maximum amount of consumer surplus created from the sales?

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There is a market with 100 people who want to sell their used cars and 100 people who want to buy a...

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