Consider the market for used cars. There are 100 cars for sale; half of them are bad while the others are good. The owner of a bad car is willing to sell it for any price above 400 but the owner of a good car is only willing to sell it for at least 1000. The bad cars are worth 600 to buyers, and some are worth 1200 to them.
(a) At a Pareto efficient allocation which car will be sold?