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Diano4ka-milaya [45]
3 years ago
12

Suppose that there is asymmetric information in the market for used cars. Sellers know the quality of the car that they are​ sel

ling, but buyers do not. Buyers know that there is a 50​% chance of getting a​ "lemon", a low quality used car. A high quality used car is worth​ $30,000, and a low quality used car is worth​ $15,000. Based on this​ probability, the most that a buyer would be willing to pay for a used car is ​$________. ​(Enter your response rounded to the nearest​ dollar.)
Business
1 answer:
zepelin [54]3 years ago
3 0

Answer:

$22,500

Explanation:

Chance of getting low quality car = 50%

Chance of getting high quality car = 50%

Cost of low quality car = $15,000

Cost of high quality car = $30,000

So, Price of the car = 50% of lower quality + 50% of higher quality

= (50% × $15,000) + (50% ×30,000)

=  $7,500 + $15,000

= $22,500

Hence, price of the used car will be $22,500.

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Explanation:

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3 years ago
the Bailey Brothers want to issue 20-year , zero coupon bonds that yield 9% .what price should it charge for these bonds if the
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Answer:

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Explanation:

The computation of the price charged is  shown below:

As we know that

Future value = Present value × (1 + rate)^number of years

So,

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6 0
3 years ago
In 2013, there were approximately 155 million people in the labor force and the unemployment rate was 7.4 percent. If the unempl
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Answer:

(a) 3.7

(b) 3.7

Explanation:

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Unemployment\,Rate=\frac{Unemployed\,Workers}{Labor\,Force}=\frac{Unemployed\,Workers}{Employed\,Workers+Unemployed\,Workers}

Then if there were 155 million people in the labor force and 7.4% where unemployed that means that 11.47 million people where unemployed

0.074=\frac{Unemployed\,Workers}{155}

Unemployed\,Workers=0.074*155=11.47

If unemployment rate would have been 5% we have

Unemployed\,Workers=0.05*155=7.75

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4 years ago
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