Suppose That There Are Two Types of Cars, Good and Bad

question 42

Multiple Choice

Suppose that there are two types of cars, good and bad. The qualities of cars are not observable but are known to the sellers. Risk-neutral buyers and sellers have their own valuation of these two types of cars as follows: Now suppose that sellers value a good car at $4,500 and a bad car at $2,500, and quality is not observed by the buyers. What is the highest price that risk-neutral buyers will offer for a used car if they recognize adverse selection?

• A) $2,500
• B) $3,000
• C) $4,000
• D) $4,500

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Criminal acts motivated by bias or prejudice towards an individual's race, religion, ethnicity, sexual orientation, gender identity, or national origin.

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The ongoing discourse concerning policies, laws, and attitudes toward immigrants and immigration to a country.

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