Why do the owners of good-quality used cars stay away from the ...

[Frost2351]

Why do the owners of good-quality used cars stay away from the market for used cars?
 
  What will be an ideal response?

Question 2

If a monopoly engages in rent seeking,
 
  i. its average total cost curve is lower than otherwise.
  ii. it might or might not make an economic profit depending on how many other competitors also are rent seeking.
  iii. it necessarily incurs an economic loss.
  A) i only
  B) ii only
  C) iii only
  D) i and ii
  E) i and iii

[kmb352]

Answer to Question 1

Only the owners of used cars know about the true quality of their cars, but buyers do not. Therefore, buyers are often not willing to pay a high price for used cars, thinking that the car they buy might be a lemon. As a result, it becomes unprofitable for owners of good-quality cars to sell their cars.

Answer to Question 2

B