If a Consumer Is Willing to Pay $5,000 for a Used

question 23

Multiple Choice

If a consumer is willing to pay $5,000 for a used car that is a free of mechanical problems and $1,000 for a used car that will require extensive repairs, the consumer will offer:

• A) $1,000 for a used car if the probability that it is free of mechanical problems is 50 percent.
• B) $3,000 for a used car if the probability that it is free of mechanical problems is 50 percent.
• C) $5,000 for a used car if the probability that it is free of mechanical problems is 50 percent.
• D) $6,000 for a used car if the probability that it is free of mechanical problems is 50 percent.

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Definitions:

Appetite

The innate craving to fulfill a physical requirement, particularly for nourishment.

Novel Foods

Foods that are new to the diet, typically encompassing products developed using new technologies and ingredients not traditionally consumed.

Neophobia

An intense or irrational fear of anything new, novel, or unfamiliar.

Homeostasis

The process by which living organisms maintain a stable internal environment despite changes in external conditions.