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There are 200 used cars for sale, half of them are good and half of them are lemons. Owners of lemons are willing to sell
There are 200 used cars for sale, half of them are good and half of them are lemons. Owners of lemons are willing to sell them for $500. Owners of good used cars are willing to sell them for prices above $900 but will keep them if the price is lower than $900. There is a large number of potential buyers who are willing to pay $700 for a lemon and $1,900 for a good car. Buyers can't tell good cars from bad, but original owners know. Find an equilibrium price.
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