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Consumers know that some fraction of all new cars produced and sold in the market are defective. The defective ones cannot be identified except by
Consumers know that some fraction of all new cars produced and sold in the market are defective. The defective ones cannot be identified except by those who own them. Assume that cars do not depreciate in value with use. Suppose consumers are riskneutral and value nondefective cars at $ each and defective cars at $ each. How many used carsfor sale in this market will be good cars?
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