Suppose there are two kinds of computers: Reliable ones, Ones that crash frequently. Suppose that some fraction
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Question:
Suppose there are two kinds of computers: Reliable ones, Ones that crash frequently. Suppose that some fraction z of all personal computers are defective.The defective ones, however, cannot be identified except by those who own them.Consumers are risk-neutral and value nondefective computers at $1500 each. Computers do not depreciate physically with use.New computers sell for $1300, used ones for $500.What is z?
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