Question
1 This problem set is due at the start of class Thursday, 13 October. Government Intervention ~ Consider a model where cars are Consider
1 This problem set is due at the start of class Thursday, 13 October. Government Intervention ~ Consider a model where cars are Consider a government ban on the sale of low quality cars. distributed Xi Uniform [0, 100] and Buyers value cares 50% more than seller's car quality (i.e. Ubuyers X; and Usellers = X;). Let the government-mandated minimum quality be denoted as B. 1.1 = If B =50, this means car i can only be offered on the market if X; 50. What is the range of prices, if any, that would allow transactions if B = 50? 1.2 Find the smallest B for which you can still find prices that will allow transactions to occur. If there is no minimum, explain why not.
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