In akerlofrsquos lemons problem with symmetric information, Ask an Expert

Economics

In Akerlof’s lemons problem, with symmetric information, suppose that 5 cars are available in equal quantity and with quality levels 0, 1, 2, 3, and 4. Suppose the sellers have a reservation price of $2,000 per unit of quality, and the buyers value cars at $3,000 per unit of quality. There is more buyers than sellers, and all agents have no information about car quality. Will a market exist in this case? Is there an equilibrium price? Explain.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91341532

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