For this problem, use the fact that the expected value of an event is a probability weighted average, the sum of each possible outcome multiplied by the probability of the event occurring. You are in the market for a used car and decide to visit a used-car dealership. You know that the Blue Book value of the car you are looking at is between $20,000 and$23,000. If you believe the dealer knows more about the car than you, how much are you willing to pay? Assume that you care only about the expected value of the car you will buy and that the car values are symmetrically distributed.

You are willing to pay $ enter your response here. (Round your response to the nearest whole number.)

Part 2

Can this problem be resolved in a competitive market?

A.

Yes. You can obtain more information about the car that you would like to buy.

B.

No. The dealer will always have more information about the car than you.