There are 90 sellers of used cellphones [each with a cellphone to sell] on the market and many more potential buyers who compete against each other to buy these cellphones. Assume cellphones can either be of good quality or bad quality. The reservation seller prices are $150 for a good quality phone, and $20 for a bad quality phone. Buyers are willing to pay up to $200 for a good quality phone, and up to $50 for a bad quality phone. The ratio of good phones to bad phones among these 90 sellers is 1/2. That means that for every good phone there are two bad phones or that the probability of dealing with a good phone is 1/3 and the probability of dealing with a bad phone is 2/ 3. QHESIIQNSJ 1) What will happen if buyers can determine the exact quality of the phones before buying? What goods get traded, what are the prices, and what is the total market surplus in this full information case? 2) What happens under asymmetric information? Just as before, state which goods get traded, at what prices, and what is the total surplus on the market? 3) What should be the seller's reservation price for the high quality phone (instead of $150) such that we will not observe an adverse selection