"Lemons" in Used Car Market & d' X& r# o8 z/ m
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. # d8 m5 q/ u$ Q8 S# G4 U
1993 Ford Ranger, bilk, 4WD, a/cAM/FM/cass., showroom condition. 3 e+ w, H" C9 u% Q6 `
Call 555-1234 after 5 p.m. ) S+ t+ V& ?7 G* S p* E
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 $2,000 lower than the price for this model with this equipment listed in a used car guidebook. Instead of being ecstatic, however, you are suspicious. % g, V3 o& Y6 W, [$ ^% c
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(washing machines and television sets, for example) 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.
* i2 W1 l2 T+ k/ K7 k. O8 U; v 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 good” a 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.
5 T5 Z5 B# x/ I+ t t' \ 1. The beginning of this passage assumes that college students & g( w" W- s0 O! ~
A) Are very clever but not very rich. ! S4 J! ?0 D* k3 R
B) Are very capable but not very diligent. + D- I+ a) M( L j7 N
C) Have limited material resources * s0 Y/ k6 t5 {1 P7 q
D) Are not rich. |