Two Types of Existing Houses Are for Sale: Ones with a Cracked

question 138

Multiple Choice

Two types of existing houses are for sale: ones with a cracked foundation and ones without.In all other respects,they are identical.Houses without cracked foundations are worth $200,000 while those with cracked foundations are worth $200,000 minus the $20,000 to fix the crack or $180,000.The frequency of solid foundations is 80%.Sellers know which type of house they have but buyers cannot detect a crack.No seller "must" sell his house in order to move and thus no one accepts anything less than its value.
Usually,the seller of a home is legally required to disclose any and all defects in the home that they know to exist.This requirement helps

• A)all buyers and sellers of homes with solid foundations.
• B)only buyers regardless of the state of the foundation.
• C)all buyers and all sellers.
• D)only sellers regardless of the state of the foundation.

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