Suppose That in New Crankshaft, Pennsylvania, the Quality Distribution of the 6,000

question 19

Multiple Choice

Suppose that in New Crankshaft, Pennsylvania, the quality distribution of the 6,000 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 quality until they buy it.An owner can either take his car to an appraiser and pay the appraiser $400 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 the car's value is at least

• A)$1,200.
• B)$3,000.
• C)$400.
• D)$800.
• E)$1,600.

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Definitions:

Farmland

Land that is used or suitable for agricultural purposes, such as growing crops or raising livestock.

Technological Advances

Refers to progress in scientific knowledge that enhances or improves technology, making processes more efficient, products more useful, or services more accessible.

Output Effect

The possibility that when the price of the first of a pair of substitute resources falls, the quantity demanded of both resources will increase.

Present Consumption

The use of goods and services for immediate satisfaction or needs, as opposed to saving for future use.