Based on the Following Table,what Is the Highest Price That

question 130

Multiple Choice

Based on the following table,what is the highest price that risk-neutral buyers will offer for a used car if they recognize adverse selection?
$$\begin{array} { | l | l | l | } \hline \text { Types of Cars } & \text { Buyer's Valuation } & \text { Seller's Valuation } \\\hline \begin{array} { l } \text { Good } \\\text { (50\% probability) }\end{array} & 10,000 &9,500 \\\hline \begin{array} { l } \text { Bad } \\\text { (50\% probability) }\end{array} & 5,000 & 4,500 \\\hline\end{array}$$

• A) $7,500
• B) $5,000
• C) $7,000
• D) $4,500

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