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.

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Definitions:

Personal Liability

The legal responsibility of an individual to compensate for harm or loss caused by their actions or negligence.

Treasury

A government department responsible for managing the finances, revenue, and economic policy of a country.

Majority Shareholder

An individual or entity that owns more than fifty percent of a company's shares, giving them significant control over the company.

Minority Shareholders

Owners of a smaller portion of a company's shares, who have limited control or power over corporate decisions compared to majority shareholders.