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:

Forward Buying

The practice of purchasing stock in larger quantities than normal in anticipation of price increases or demand spikes.

Excess Inventory

The surplus of stock that exceeds the demand, leading to increased holding costs and potential obsolescence.

Total Cost

The complete sum of all costs associated with the production or provision of goods or services, including fixed and variable costs.

Integer-Multiple

A value that is a whole number multiple of another, often used in contexts like inventory stocking or lot sizing.