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Alek Hsiang Alek Hsiang
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4 years ago



Figure 14.5 represents the market for used cars. Suppose buyers are willing to pay $5,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. If buyers believe that 80% of used cameras in the market are lemons (low quality), what is consumers' willingness to pay ($X)?

▸ $5,000

▸ $3,400

▸ $3,000

▸ $1,700
Textbook 
Survey of Economics: Principles, Applications and Tools

Survey of Economics: Principles, Applications and Tools


Edition: 6th
Authors:
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qwer34qwer34
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#1
Posts: 376
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4 years ago
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Alek H. Author
wrote...
#2
4 years ago
Thank you, thank you, thank you!
wrote...
#3
4 years ago



Figure 14.5 represents the market for used cars. Suppose buyers are willing to pay $5,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. If buyers believe that 80% of used cameras in the market are lemons (low quality), how many plums will be supplied in the market?

▸ 30

▸ 40

▸ 70

▸ 120
all is normal
wrote...
#4
4 years ago
40
wrote...
#5
4 years ago



Figure 14.5 represents the market for used cars. Suppose buyers are willing to pay $5,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. If buyers believe that 80% of used cameras in the market are lemons (low quality), what percent of used cars sold will actually be plums?

▸ 20%

▸ 25%

▸ 33.33%

▸ 75%
wrote...
#6
4 years ago
20%
wrote...
#7
4 years ago
Thanks
wrote...
#8
4 years ago



Figure 14.5 represents the market for used cars. Suppose buyers are willing to pay $5,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. Initially buyers believe that 80% of used cameras in the market are lemons (low quality). Compared to the outcome with these initial expectations, how many fewer cars are sold in equilibrium?

▸ 50

▸ 80

▸ 110

▸ The number of cars sold in equilibrium is the same as the outcome with neutral expectations.
wrote...
#9
4 years ago
The number of cars sold in equilibrium is the same as the outcome with neutral expectations.
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