Suppose That in New Crankshaft, Pennsylvania, the Quality Distribution of the 5,000

question 12

Multiple Choice

Suppose that in New Crankshaft, Pennsylvania, the quality distribution of the 5,000 used cars on the market is such that the number of used cars of value less than V is V/2.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 $200 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)$2,500.
• B)$400.
• C)$200.
• D)$600.
• E)$800.

---

Definitions:

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method, or decision.

Infant Vocalisations

The earliest forms of vocal communication emitted by infants, including cooing and babbling sounds.

Consonant-Vowel

A syllabic structure forming the basic building blocks of language, involving a consonant sound followed by a vowel sound.

Gambler's Fallacy

The erroneous belief that if an event occurs more frequently than normal during some period, it will happen less frequently in the future, or vice versa.