Figure 14.5 represents the market for used cars. Suppose buyers are willing to pay $5,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. Initially buyers believe that 80% of used cars in the market are lemons (low quality). Compared to the outcome with these initial expectations, how many fewer cars are sold in equilibrium?
A. 50
B. 80
C. 110
D. The number of cars sold in equilibrium is the same as the outcome with neutral expectations.
Answer: D
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