Please answer these questions and explain.

1. John wants to sell his car. His friend is willing to pay $5000 for the car. For an},r price 1} between $5000 8.: $6000 he can sell the car with probability 6 Witn- Suppose that his weighting function is linear (ie 1r(p) : p] and his valuation function is given as follows: _ ifxgo v($) \\/1:if:r~=:[} (a) If John is an optimist and his reference point is $6,000 for his car, what price should he set? Assume that if no oifer is made, John will sell it to his friend for $5000. (b) In class we showed that if his reference point was $5,000, he would set a different price. Discuss why the two optimal prices are diiferent