Suppose That Sellers Value a Good Car at $10,500 and a Bad

question 58

Multiple Choice

Suppose that sellers value a good car at $10,500 and a bad car at $5,500,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 ignore adverse selection when 60 of the cars are good?

• A) $5,500
• B) $8,000
• C) $8,500
• D) $10,500

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Definitions:

Parameters

Variables listed as part of a function's declaration or definition, representing the inputs that the function accepts.

Formal Arguments

Parameters specified in the function definition, representing the values that will be passed to the function upon its call.

Parameters

Variables listed as part of a function's declaration/definition, representing values passed into the function.

Function Declarator

Describes the name, return type, and parameters of a function, defining its interface in a program.