Suppose there are four boats available at an auction. The sellers know the quality of their boats but the prospective buyers do not. The buyers know that two of the boats are high quality and two of the boats are low quality. Buyers value high$-$quality boats at $$100,000$ and low$-$quality boats at $$60,000.$ Sellers value high$-$quality boats at $$80,000$ and low$-$quality boats at $$40,000.$ If the auctioneer sets a price per boat at $$50,000,$ how many boats and of which type will sellers make available?

Question $5$Answer

a$.$

one high$-$quality and one low$-$quality boat

b$.$

two low$-$quality boats

c$.$

two high$-$quality boats

d$.$

all four boats