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Adverse selection The supply of high quality good is MC H = 40 + Q H ; The demand of high-quality good is P H

Adverse selection

The supply of high quality good is MC_H = 40 + Q_H ; The demand of high-quality good is P_H = 100 The supply of low quality good is Q_L; The demand of low quality good is P_L = 50

a. What are the prices and quantity with perfect information

? b. What are the prices and quantity without information?

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