Suppose Joe Has a Two-Year Old Honda Civic That's in Excellent

question 84

Multiple Choice

Suppose Joe has a two-year old Honda Civic that's in excellent condition and that he would be willing to sell for $13,000. Lauren, who is risk-neutral, is considering whether to buy Joe's car. She's willing to pay $14,000 for a two-year Honda Civic that's in excellent condition and only $10,000 for one that's not in excellent condition. Lauren cannot tell whether Joe's car is in excellent condition. She believes that only 20 percent of two-year old Hondas for sale in the market are in excellent condition and that the other 80 percent are not in excellent condition. To Lauren, Joe's car looks just like every other two-year Honda that's for sale. What's the most Lauren is willing to pay for Joe's car?

• A)$10,000
• B)$10,800
• C)$13,000
• D)$14,000

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Definitions:

Brand Communities

Shared interest groups formed around a brand, where members engage, share experiences, and exhibit loyalty.

Crisis of Conformity

A situation in which adherence to societal norms leads to negative consequences or a fundamental questioning of those norms.

Authenticity as Connection

Highlights the importance of genuine relationships and interactions between brands and consumers in creating a sense of trust and loyalty.

Brand Communities

Groups of customers who are united by their loyalty to a brand and who engage with each other in activities or discussions about the brand.