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Consider a market for used motor cycles. There are good quality and poor quality used motor cycles on the market. Any seller of good quality used motor cycles will accept a price no lower than $500.

Consider a market for used motor cycles. There are good quality and poor quality used motor cycles on the market. Any seller of good quality used motor cycles will accept a price no lower than $500. Any seller of a poor quality motor cycle will sell for no lower than $100. Assume the market is perfectly competitive but buyers cannot determine quality. There are a total of 2, 500 motor cycles on the market, 1,000 of which are poor quality motor cycles, for which buyers have no value. Suppose that market demand for good quality used motor cycles is given by: P = 2,000-0.5Q. How many good quality motor cycles will be sold? How many poor quality' motor cycles well be sold? Explain and illustrate this result graphically above.

Consider a market for used motor cycles. There are

Jul 12 2021 View more View Less

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