Fashion and Prices. You are in the market for a used car and have narrowed your options to two types of cars, type F and type P. According to Consumer Reports, the two types of cars have roughly the...

Fashion and Prices. You are in the market for a used car and have narrowed your options to two types of cars, type F and type P. According to Consumer Reports, the two types of cars have roughly the same frequency of lemons (50 percent). Like other consumers, you are willing to pay $1,000 for a lemon and $7,000 for a plum. The people who buy new F cars are fashion-conscious and purchase a new car every 3 years. The people who buy new P cars are insensitive to the whims of fashion. Predict the equilibrium prices of the two types of cars and defend your answer with two graphs, one for each type of car.