Suppose That in New Crankshaft, Pennsylvania, the Quality Distribution of the 2,000

question 11

Multiple Choice

Suppose that in New Crankshaft, Pennsylvania, the quality distribution of the 2,000 used cars on the market is such that the number of used cars of value less than V is . Original owners must sell their used cars. Original owners know what their cars are worth, but buyers can't determine a car's value until they buy it. An owner can either take his car to an appraiser and pay the appraiser $500 to appraise the car (accurately and credibly) or sell the car unappraised. In equilibrium, car owners will have their cars appraised if and only if their value is at least

• A) $1,500.
• B) $1,000.
• C) $500.
• D) $1,000
• E) $2,000.

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Definitions:

Binding Arbitration Clause

A contract provision mandating that all disputes arising under the contract must be settled by arbitration.

Statute of Limitations

Laws that set the maximum time within which legal proceedings can be initiated after an event occurred which gives rise to the prosecution.

Bilateral Contracts

Agreements involving two parties where each commits to performing a specific act in exchange for the other's performance.

Promised Action

An agreed-upon deed or activity that a party has committed to perform in the scope of a contract or agreement.