Why bad cars drive good cars out of the used-car market


Explain the paradox of why new cars usually lose a large fraction of their market value the moment they are driven from the showroom. Identify the economic principle that explains this paradox. Why might bad cars drive good cars out of the used-car market? Give at least two possible solutions to resolve this paradox.

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Microeconomics: Why bad cars drive good cars out of the used-car market
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