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Lemons in Used Car Market Suppose that you, a college student of somewhat limited means, are in the market for a used pickup truck. The following ad in a local used car publication catches your eyes. 1993 Ford Ranger, bilk, 4WD, a/cAM/FM/cass., showroom condition. Call 555-1234 after 5 p.m This is exactly the kind of vehicle you want, so you call to inquire about the price. The price you are quoted over the phone is $2,000 lower than the price for this model with this equipment listed in a used car guidebook. Instead of being ecstatic, however, you are suspicious. For many products, when you must pay less than the going rate, you believe you are getting a great deal. This is not necessarily the case for used cars or other durable goods because with expensive products-or, what is essentially the same thing, products with high replacement costs-you must be particularly careful about getting a lemon. Or a product of substandard quality. In addition to asking the price, the age of a car-or any other consumer durable-is a factor when you are trying to determine whether a seller is attempting to unload a lemon. While people have all sorts of reasons for wanting to sell their cars-even relatively new cars-most people hold off until they have put many thousands of miles on a car or until the used car is several years old. You would probably be as suspicious of a car that is too new as you would a car that is too gooda deal. In fact, you are probably willing to pay a high price for a high-quality used car. While this price would certainly be acceptable to the seller, the competitive market might not facilitate such trades. | 
