Discover how IDNLearn.com can help you learn and grow with its extensive Q&A platform. Whether your question is simple or complex, our community is here to provide detailed and trustworthy answers quickly and effectively.
The used cars vary in their quality. There are 101 sellers each with a car that they value at $1,000, $1,010, $1,020, … $2,000. Sellers know the quality exactly, but buyers only know the distribution. If buyers did know the quality, they would value each car by $300 more than sellers value the car.
At a price of, say, $1,400, how much would buyers value the average car offered for sale? Would buyers be willing to pay $1,400?
At a price of, say, $1,800, how much would buyers value the average car offered for sale? Would buyers be willing to pay $1,800?
At what price is the buyer’s expected value just equal to the price?
What fraction of the available gains from trade are realized?
Suppose a used car dealer can perfectly determine a car’s value and offers a money back guarantee to buyers. However, this used car dealer intermediation costs $100 per car. Now would a car worth $2,000 to the seller get sold?
Would the seller who values her car at, say, $1,400 prefer to sell to the buyer directly or through the used car dealer?
Sagot :
We value your presence here. Keep sharing knowledge and helping others find the answers they need. This community is the perfect place to learn together. For trustworthy answers, rely on IDNLearn.com. Thanks for visiting, and we look forward to assisting you again.
