The Supply of Used High-Quality Motorcycles Is Q_H = 0

question 56

Multiple Choice

The supply of used high-quality motorcycles is Q_H = 0.2P_H - 1,000, and the supply of used low-quality motorcycles is Q_L = 0.5P_L - 1,000. In the used-motorcycle market, potential buyers cannot tell them apart. Consumers value high-quality motorcycles at $10,000 and low-quality motorcycles at $6,000. If consumers believe there is a 50% probability that a used motorcycle is high quality, ____ high-quality motorcycles will be offered for sale at the consumers' willingness to pay.

• A) 8,000
• B) 1,400
• C) 600
• D) 0

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Definitions:

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