answer is not DHomework Answers
Option C is correct
Because buyers are not able to tell whether a car is a used car or a new car, they will place an average price on the car which is the expected price
Expected price = 60% x 2000 + 40% x 1000 = 1600
At this price sellers of new car will not be able to sell because there reservation price is 1800. Therefore the market will have all the sellers selling lemons. Buyers are willing to pay 100 for a lemon which means only lemons will be sold at 1000.
Add Answer to:
answer is not D
2000 1800 Price ($) Price ($) 1000 800 Lemons per year Good...
1. Suppose there are two kinds of used cars, good cars and lemons. A good car...
1. Suppose there are two kinds of used cars, good cars and lemons. A good car is worth $10,000, and a lemon is worth $2,000. Owners of used cars know where the car is good or bad, but potential buyers do not. (a) Supposing half of all cars are good and half are lemons, what is the expected value of a used car of unknown quality? (b) Based on your answer to part (a), do you expect owners of used...
What's the answer for both Qs There are many buyers who value high-quality used cars at...
What's the answer for both Qs
There are many buyers who value high-quality used cars at the full-information market price of p, and lemons at P2. There are a limited number of potential sellers who value high-quality cars at V1 spand lemons at V2 =p2. Everyone is risk neutral. The share of lemons among all the used cars that might potentially be sold is 0. Assume P4 > P2, V7 > V2. Further, suppose that the buyers incur a transaction...
Suppose that everyone in a used-car example is risk neutral, potential car buyers value lemons at...
Suppose that everyone in a used-car example is risk neutral, potential car buyers value lemons at $1,500 and good used cars at $2,200, the reservation price of lemon owners is $500, and the reservation price of owners of high-quality used cars is $2,000. The share of current owners who have lemons is 0. For what values of 0 do all the potential sellers sell their used cars? Describe the equilibrium. The most a risk-neutral buyer would be willing to pay...
Read Eye on the Market for Used Cars, and then explain how a warranty signals that...
Read Eye on the Market for Used Cars, and then explain how a warranty signals that a car isn't a lemon and why it is in a used-car dealer's self-interest to offer a warranty. A warranty signals that a car isn't a lemon because A. giving warranties on lemons results in dealers bearing a high cost of repair O B. "lemon laws" require dealers to honor warranties O C. a warranty creates asymmetric information O D. private sellers, who sell...
1000 - 800 600 400 200 40 80 120 160 200 240 280 320 QUANTITY OF...
1000 - 800 600 400 200 40 80 120 160 200 240 280 320 QUANTITY OF ELECTRIC CARS (Millions of cars) If the price of an electric car is $800 per car, consumers are willing to buy 160 million electric cars. The maximum price at which consumers are willing to buy 120 million electric cars is $1,000 per car. Lots of people would like to own an electric car, but people who value electric cars below the market price choose...
Price Quantity Demanded Quantity Supplied $20 2400 0 $30 2000 200 $40 1600 400 $50 1200 600 $60 800 800 $70 400 1000 $80...
Price Quantity Demanded Quantity Supplied $20 2400 0 $30 2000 200 $40 1600 400 $50 1200 600 $60 800 800 $70 400 1000 $80 0 1200 Refer to the above table. Suppose the government imposes a price floor of $30 on this market. What will be the size of the surplus in this market? A. 0 units B. 200 units C. 1800 units D. 2000 units
Is this answer correct? What I calculated is not the same as this answer. Jennifer is...
Is this answer correct? What I calculated is not the same as
this answer.
Jennifer is looking to sell her one-person Laser sail boat, which she has kept in excellent condition. Ordinarily this type of sail boat sells second-hand for $4,000 but as Jennifer has looked after hers extremely well, she will only want to sell i for $4,600. Tom is looking to buy a second-hand sail boat and is willing to pay up to $4,900 for a boat in...
Price per Tulip Tulips $2.00 $1.25 $1.00 D 400 800 1200 Quantity 600 1000 Refer to...
Price per Tulip Tulips $2.00 $1.25 $1.00 D 400 800 1200 Quantity 600 1000 Refer to the Figure: Tulip Market. The tariff revenue generated from the tariff is O $150 $100 $400 $200
Millions of tons of strawberries (per month) 1,000 950 A B F 800 D 550 G...
Millions of tons of strawberries (per month) 1,000 950 A B F 800 D 550 G 0 1 E 2 3 4 Submarines (per month) Where is the worse point the economy can be at? ОА oc OE OG Let's assume the price of gasoline has increased 5% which lead to a decrease in gas purchased of 1%. What is the price elasticity of demand? What type of good is this? 0.2; inelastic 5.0; inelastic 0.2, elastic O 5.0; elastic
A gold mining firm sells futures contracts worth 1000 ounces at a price of $700 per...
A gold mining firm sells futures contracts worth 1000 ounces at a price of $700 per ounce for maturity one year from today. If gold futures prices increase to $702 per ounce, what is the cash flow to the producer? O A. $702,000 ○ B. -S2000 C. $700,000 O D. $0 O E. $2000
What's the answer for both Qs
There are many buyers who value high-quality used cars at the full-information market price of p, and lemons at P2. There are a limited number of potential sellers who value high-quality cars at V1 spand lemons at V2 =p2. Everyone is risk neutral. The share of lemons among all the used cars that might potentially be sold is 0. Assume P4 > P2, V7 > V2. Further, suppose that the buyers incur a transaction...
Suppose that everyone in a used-car example is risk neutral, potential car buyers value lemons at $1,500 and good used cars at $2,200, the reservation price of lemon owners is $500, and the reservation price of owners of high-quality used cars is $2,000. The share of current owners who have lemons is 0. For what values of 0 do all the potential sellers sell their used cars? Describe the equilibrium. The most a risk-neutral buyer would be willing to pay...
Read Eye on the Market for Used Cars, and then explain how a warranty signals that a car isn't a lemon and why it is in a used-car dealer's self-interest to offer a warranty. A warranty signals that a car isn't a lemon because A. giving warranties on lemons results in dealers bearing a high cost of repair O B. "lemon laws" require dealers to honor warranties O C. a warranty creates asymmetric information O D. private sellers, who sell...
1000 - 800 600 400 200 40 80 120 160 200 240 280 320 QUANTITY OF ELECTRIC CARS (Millions of cars) If the price of an electric car is $800 per car, consumers are willing to buy 160 million electric cars. The maximum price at which consumers are willing to buy 120 million electric cars is $1,000 per car. Lots of people would like to own an electric car, but people who value electric cars below the market price choose...
Is this answer correct? What I calculated is not the same as
this answer.
Jennifer is looking to sell her one-person Laser sail boat, which she has kept in excellent condition. Ordinarily this type of sail boat sells second-hand for $4,000 but as Jennifer has looked after hers extremely well, she will only want to sell i for $4,600. Tom is looking to buy a second-hand sail boat and is willing to pay up to $4,900 for a boat in...
Price per Tulip Tulips $2.00 $1.25 $1.00 D 400 800 1200 Quantity 600 1000 Refer to the Figure: Tulip Market. The tariff revenue generated from the tariff is O $150 $100 $400 $200
Millions of tons of strawberries (per month) 1,000 950 A B F 800 D 550 G 0 1 E 2 3 4 Submarines (per month) Where is the worse point the economy can be at? ОА oc OE OG Let's assume the price of gasoline has increased 5% which lead to a decrease in gas purchased of 1%. What is the price elasticity of demand? What type of good is this? 0.2; inelastic 5.0; inelastic 0.2, elastic O 5.0; elastic
A gold mining firm sells futures contracts worth 1000 ounces at a price of $700 per ounce for maturity one year from today. If gold futures prices increase to $702 per ounce, what is the cash flow to the producer? O A. $702,000 ○ B. -S2000 C. $700,000 O D. $0 O E. $2000
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 11 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 11 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 11 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 11 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 11 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 11 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 11 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 11 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 11 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 11 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 11 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 11 months ago