Suppose That Sellers Value a Good Car at $4,500 and a Bad

question 21

Multiple Choice

Suppose that sellers value a good car at $4,500 and a bad car at $2,500, and quality is not observed by the buyers.What is the highest price that risk-neutral buyers will offer for a used car if they recognize adverse selection?

• A)$2,500.
• B)$3,000.
• C)$4,000.
• D)$4,500.

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Definitions:

Diagnosed

Determination of a disease or condition from its signs and symptoms.

Double-Contrast Study

A radiographic technique used in medical imaging that uses two types of contrast material to better visualize the interior lining of organs.

Barium Enema

A diagnostic medical imaging procedure used to examine the interior of the colon by filling it with a barium sulfate contrast material.

Small Lesions

Minor or small areas of damaged tissue or abnormality in the body.