Since buyers believe 50% of cars are lemons, buyers' demand is expressed as a single market demand curve and price for both types. The buyers will pay the expected value of any given car; (0.5*5,000) + (0.5*10,000) = 2,500 + 5,000 = 7,500. Of course, sellers of a used low-quality car will happily sell at this price but sellers of a high-quality car will not, since it is below 8,000. The market adjusts to consist of more low-quality cars; this adverse selection leads to an equilibrium where the market is dominated by low-quality cars and high-quality cars drop out of the market, even though there are buyers who would pay for high-quality cars at an appropriate value. In the long term, since high quality car sellers will be "squeezed out" of the market, the buyers will also adjust their expectations and eventually assume any used car in the market is a lemon, and will only pay $5000. There will be two distinct markets for selling high quality used cars and low quality used cars