Question
In the market for used cars there are good cars and bad cars. The good cars comprise a fraction G of all the cars
In the market for used cars there are good cars and bad cars. The good cars comprise a fraction G of all the cars that may be potentially up for sale, where 0 (c) Suppose that G=8/10. What is the maximum price buyers are willing to pay for a car? Will both types of cars be offered for sale in the market at this price? (d) Continue to assume that G-8/10 There is an agency that can assess each car and certify it as "good" or "bad". If certified as good, the seller can negotiate a price of 45 with the buyer. If uncertified cars are selling for the price you found in (c), what is the maximum that a seller of a good car will be willing to pay to get his car assessed?
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Microeconomics
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
1st Edition
978-1464146978, 1464146977
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