The market for cars can be divided between used cars and new cars. However, when you purchase a car (new or old) sometimes you obtain a lemon (a car that will have a lot of problems). Assume: 1) Bad cars are worthless. Regardless if new or used, they have a value of zero. 2) %% of all cars are Lemon 3) People prefer new cars to used cars. If the cars are the same price, then people will pick the new car. 4) The seller will not price good or bad cars differently. The price will be the same. Example: new cars will all be 500$, while all used cars will be 400$. You are a potential buyer of a car. Should you purchase a used car