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1. Consider a market for used cars, in which there is a continuum of identical buyers, of total mass equal to 1. Each buyer purchases

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1. Consider a market for used cars, in which there is a continuum of identical buyers, of total mass equal to 1. Each buyer purchases at most one car, and has enough income to finance such a purchase. There is also a continuum of sellers, who are differentiated by the quality of the car they own, which is indicated by q. Assume that q is uniformly distributed on the interval [0, 1]. The seller private information on the quality of the car he offers for sale, and his reservation value is denoted by c(q). Buyers do not observe the quality of the car that is offered for sale. However, if the car they purchase ends up being of quality q, they receive a utility v(q) from using the car. More specifically, we have c(q) = q, and that v (q) = 1,9. Compute the competitive equilibria of this market. How many cars are sold in equilibrium, and what is the equilibrium price

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