- 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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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