Question

Please help with these two questions

QUESTION 5 Assume that there is a market for used cars where there are only two types of cars: good cars and bad cars. Below is the full information for consumers and sellers Demand for good cars is: Q = 50 if PS$200 Q 0, otherwise Demand for bad cars is: 50 if PS $80 Q = Q 0, otherwise Supply for good cars is: Q 75 if P2 $150 =0 otherwise Q Supply for bad cars is: Q 75 if P2 $50 Q 0 otherwise Assume that the buyers cannot tell whether a car is good or bad. What is the asymmetric equilibrium quantity in the market for good cars? QUESTION 6 Assume that there is a market for used cars where there are only two types of cars: good cars and bad cars. Below is the full information for consumers and sellers. Demand for good cars is: 75 if PS $300 Q Q 0, otherwise Demand for bad cars is: Q 75 if PS $80 Q 0, otherwise = Supply for good cars is: Q 50 if P 2 $150 Q 0 otherwise Supply for bad cars is: Q 50 if P 2 $50 =0 otherwise Q Assume that the buyers cannot tell whether a car is good or bad. What is the asymmetric equilibrium price in the market for bad cars?

Answer 1

Cfven Denand Supply Sped las P200 P $50 Cannot tol nat tne okng assumption o bad fn the maket COnenex a ar fs Tne agmerte uantity ave: EV god cos) cass Epecred Value CEV) jor byes = 60 X 200 5ox TO -50 2k heutral buyer 100 10 = 140 Bupp'y Deuand PS $300 Food Cars badcas kfu dne gue assunptibus ntyenistiontn Prica Tor Tne asyuwer ic n dne nosket value fos buyers s papadag selles q bad Caxd 20 3X20+2