1)Why can adverse selection drive good used cars from the market? 2) The market demand curve for a product is given below: QD=250−0

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1)Why can adverse selection drive good used cars from the market?

2)

The market demand curve for a product is given below:

QD=250−0.5PQD=250−0.5P

a. Assume that the market is supplied by a monopolist with a constant unit cost equal to $100. Calculate the equilibrium price and quantity.

b. Now assume that the market is supplied by perfectly competitive firms and that the market supply curve is perfectly elastic at a price equal to $100. Calculate the equilibrium price and quantity.